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Could Brics ratings agencies take a different view on SA?

11 April 2017 7:51 AM

Prof Adrian Saville explains what would happen if SA doesn't use the big three credit rating agencies S&P, Moody's and Fitch.

University of Pretoria visiting professor, Adrian Saville, says Brics (Brazil, India, China, Russia and South Africa) rating agencies could have a different outcome than that of the big three credit rating agencies, Standard & Poor's (S&P), Moody's and Fitch Group.

S&P and Fitch downgraded South Africa’s credit rating to junk status.

President Jacob Zuma has previously said Brics countries had taken the decision that they could rate themselves to ensure a more "balanced view".

Saville explains the pros and cons if South Africa were to be rated by Brics rating agencies.

The three large rating agencies do share a single perspective. They come from similar schools of thought. So you don't get an alternative perspective and challenge to the common view.

Prof Adrian Saville, Gordon Institute of Business Science, University of Pretoria

A different rating agency built out of a different school of thought could certainly have merit, whether its Brics.

Prof Adrian Saville, Gordon Institute of Business Science, University of Pretoria

There is certainly the place for different perspectives.

Prof Adrian Saville, Gordon Institute of Business Science, University of Pretoria

You can go to anyone you like and ask them to assess you... but what's key in this is that the rating agencies need to have statue and gravity in the eyes of investors. It would require time for these rating agencies to establish that reputation and to be regarded as equivalent or better assessors and guiders of risk.

Prof Adrian Saville, Gordon Institute of Business Science, University of Pretoria

Listen to the audio below for more analysis...


11 April 2017 7:51 AM