Moody’s Investors Service cut South Africa’s credit rating below investment grade, delivering the country a full house of junk assessments as it grapples with a nationwide lockdown to curb the spread of the novel coronavirus.

It now assesses the nation’s foreign- and local-currency debt at Ba1, one level below investment grade. The move reflects “continuing deterioration in fiscal strength and structurally very weak growth,” the company said in a statement Friday. The outlook on the rating remains negative.

“Unreliable electricity supply, persistent weak business confidence and investment as well as long-standing structural labour market rigidities continue to constrain South Africa’s economic growth,” Moody’s said. “As a result, South Africa is entering a period of much lower global growth in an economically vulnerable position.”

The ratings company changed the outlook on the country’s ratings to negative in November, saying it wants to see a credible strategy in the February budget for halting a deterioration in public finances. However, the spending plans presented by finance minister Tito Mboweni last month showed the fiscal deficit as a percentage of GDP would widen to an almost three-decade high.

”The decision by Moody’s could not have come at a worse time,” national treasury said in a statement. “South Africa, like many other countries, is seized with containing the outbreak of the coronavirus.”

”These two events will truly test South African financial markets,” national treasury said. “The government remains committed to implementing structural economic reforms to address the weak economic growth, constrained fiscus and the ailing state-owned companies.”

Outlook bleak

The nationwide lockdown that suspended all activity except essential services from Friday means the budget shortfall and the government’s debt burden could deteriorate even further. Even before the lockdown, the central bank forecast that the economy will contract for a calendar year for the first time since 2009.

The downgrade leaves South Africa without an investment-grade rating for the first time in 25 years and will cause it to fall out of the FTSE World Government Bond Index, which could prompt significant capital outflows. It will also raise borrowing costs, complicating the government’s efforts to narrow the budget gap.

The nation’s fiscal deficit will widen in fiscal 2020 to around 8.5% of GDP, as revenue declines this year, only narrowing very gradually thereafter, Moody’s said. It estimates that the debt burden will reach 91% of GDP by fiscal 2023, inclusive of the guarantees to state-owned enterprises from 69% at end of fiscal 2019.