In its Financial Stability Review of 2 May, the South African Reserve Bank sights the probability of further downgrades to South Africa’s credit ratings. This may weaken the currency and lead to higher borrowing costs. In April the sovereign credit rating was cut to junk (debt “non-investment grade” or “speculative”) by both S&P Global Ratings and Fitch Ratings Ltd. Having South Africa at the 2nd lowest investment grade level, Moody’s prepares to visit the country for review. The catalyst for the downgrades was President Zuma firing Finance Minister Pravin Gordhan at the end of March in a cabinet reshuffle. Since then South Africa’s six-member banks index (incl Standard Bank Group and Barclays Africa Group) has plummeted more than 8%, making it the country’s worst performing stocks of the year. It is feared local banks will increasingly have to battle declining returns and rising bad debts in the year ahead.