S&P holds South Africa's rating at BBB-, downgrades local debt

JOHANNESBURG (Reuters) - Standard & Poor’s downgraded South Africa’s local debt by one notch to BBB on Friday but kept the country’s sovereign credit rating unchanged at BBB-, one level above “junk” status, while saying the economy was still struggling.

S&P retained its negative outlook on the sovereign unchanged, it said in a statement. The rand gained more than 1.5 percent against the dollar after the ratings release.

About 90 percent of South Africa’s 2.4 trillion rand ($173 billion) debt is held in local currency, and the cut could see the country fall out of global bond indices, preventing institutional investors from buying its debt.

Reporting by Mfuneko Toyana; Writing by James Macharia; Editing by Catherine Evans