S&P's waves red flags

When S&P’s last downgraded Botswana in 2009, the country was wrestling with a collapse of diamond revenues due to the global recession. This time, having emerged from a year of weaker diamond revenues, analysts at S&P’s said their projection was that the country would face continuing pressure on its budget in the “next few years”.

At their essence, sovereign credit ratings are ‘scores’ assigned to countries’ ability to repay debts. Low credit ratings mean countries pay higher interest rates and have lower ability to attract investors, who would worry about raising affordable capital from within such countries.