(Bloomberg) -- South Africa could fall deeper into junk territory after S&P Global Ratings cut the outlook on its assessment of the nation’s debt to negative.

It held the assessment on the foreign-currency debt at BB, two steps below investment grade.

“The negative outlook indicates that South Africa’s debt metrics are rapidly worsening as a result of the country’s low GDP growth and high fiscal deficits, S&P said in a statement on Friday. “We could lower the ratings if we were to observe continued fiscal deterioration, for example, due to higher pressure on spending, rising interest costs, or the crystallization of contingent liabilities related to state-owned enterprises (SOEs), especially Eskom.”

The outlook follows the country’s latest budget-policy statement, which showed a rapidly deteriorating fiscal outlook due to billions of dollars in bailouts for loss-making power producer Eskom Holdings SOC Ltd . Gross government debt is set to surge to 80.9% of gross domestic product by fiscal 2028 unless urgent action is taken, the National Treasury said last month. The trajectory is almost 20 percentage points higher than projected in the February budget and shows no sign of stabilizing. The budget deficit will peak at an 11-year high in 2020-21.

Sixteen out of 22 economists surveyed by Bloomberg predicted the move, which opens the country up to a further downgrade. Another cut means it will take South Africa even longer to regain its investment-grade status at S&P, which was the first major ratings company to cut the nation to junk in 2017 after former President Jacob Zuma replaced the finance minister in a late-night cabinet shake-up.

”A move to negative from S&P probably doesn’t impact the currency all that much just given S&P’s credit rating is already non-investment grade,” said Brendan McKenna, a New York-based currency strategist at Wells Fargo. “There is a risk that a move to negative could influence Moody’s to downgrade at their next review, but that is more of a tail-risk than anything.”

“We now anticipate that the general government deficit will average 6.2% of GDP through 2019-2022,” S&P said. “This implies that debt, net of liquid assets, will reach 67.7% of GDP by 2022.”

S&P’s move comes less than three weeks after Moody’s Investors Service lowered the outlook on the country’s last-remaining-investment-grade to negative, effectively giving the country three months to get its finances in order.

A Moody’s downgrade would force South Africa out of the FTSE World Government Bond Index, which could prompt a sell-off and outflows of as much as $15 billion, according to Bank of New York Mellon Corp. It will also raise borrowing costs and make it even more difficult for government to finance the budget.

To contact the reporters on this story: Prinesha Naidoo in Johannesburg at pnaidoo7@bloomberg.net;Justin Villamil in Mexico City at jvillamil18@bloomberg.net

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Ana Monteiro, Hari Govind

©2019 Bloomberg L.P.