03/04/2017 17:13 BST | Updated 04/04/2017 11:52 BST

South Africa Downgraded To Junk Status By S&P

S&P Global Ratings downgraded SA’s sovereign credit rating following the cabinet reshuffle.

Mike Hutchings / Reuters

Ratings agency S&P has downgraded South Africa to sub-investment grade, or junk status, on Monday. This follows the shock executive reshuffle by President Jacob Zuma in the early hours of Friday morning.

His recall of Pravin Gordhan as Finance Minister along with his deputy Mcebisi Jonas sparked fears of a downgrade.

Yields on the government's benchmark 10-year R186 bonds surge from 8.355% to 8.84% on Monday, Business Day reported.

The yield on the R186 bond spiked at 10.4% on December 11 2015 when Zuma caused chaos by appointing Des van Rooyen as finance minister before brining Gordhan back into the job to calm market.

Moody's rating review is due on Friday, the report added.

Moody's is the most generous of the three major credit ratings agency, placing SA at Baa2 which is equivalent to BBB — two notches above junk — in S&P's and Fitch's nomenclature.

Fitch, which rates SA on the edge of junk at BBB-, does not forewarn when it will release its reviews.

Zuma wielded an axe to his cabinet just after midnight on Thursday, appointing ten new ministers and ten new deputy ministers. Five ministers and three deputies lost their jobs while others received new portfolios.

The most controversial but expected of these, was the replacement of Finance Minister Pravin Gordhan with Home Affairs Minister Malusi Gigaba: a Zuma loyalist who is also perceived to be close with the controversial Gupta family, who are at the heart of accusations around state capture.

Axed Gordhan and Tourism Minister Derek Hanekom said they were not informed of the decision and found out via the media.

Sources told Huffington Post South Africa of the last minute deals that others tried to strike to get Zuma to back down — unsuccessfully in the end. A source close to one of the ministers being sworn in on Friday said the minister only found out about their appointment after 10pm on Thursday.

Curious charges hung over Gordhan's head for months, until they were finally dropped in October last year, leading to rumours that the charges were trumped up to be used by Zuma as a premise for sacking the finance minister.

But the speculation reached fever pitch on Monday when Zuma instructed Gordhan and Jonas to return home from an international investor roadshow. He gave no reasons for the instruction, in a terse statement, but it was widely reported as down to an intelligence report, the so-called "Operation Checkmate" document. The report claimed that Gordhan and Jonas planned to meet foreign businesses to discredit Zuma and that was the reason for their recall from the overseas trip, according to reports.

Following the reshuffle there has been widespread condemnation for the move, including from within the ruling party itself. Senior ANC leaders like deputy president Cyril Ramaphosa and chief whip Jackson Mthembu particularly took issue with the decision to remove Gordhan over the intelligence report.