Once upon a time, the sovereign credit downgrade of an emerging market powerhouse would be enough to send global markets into spasms of selling. The curious case of South Africa, however, has been decidedly different.

Indeed, despite being the "S" in BRICS (Brazil, Russia, India, China—the largest emerging economies in the world—the situation in South Africa appears to have very limited spill over for other markets.

Although the country's $143 billion in external debt remains high by historical standards, that burden is considerably lower than other debt-heavy economies like Greece, whose struggles with investors and euro zone officials to reduce its debt pile often reverberate across global markets.

The recent and sudden ouster of South Africa's respected finance minister, Pravin Gordhan – coupled with rising political instability that may yet force President Jacob Zuma from office prematurely – have sent the country's risk premiums soaring. Gordhan's replacement, Malusi Gigaba, is a former Home Affairs official with little financial or economic experience.

The turmoil prompted ratings agencies S&P and Fitch to downgrade South Africa's sovereign rating from BBB- to BB+, to speculative or "junk" levels, with a negative outlook. Meanwhile, Moody's also placed its Baa2 rating on downgrade review.

Although South Africa's official currency, the rand, has taken the downgrade on the chin, investors say the fallout from the downgrades appears contained—at least for now.

According to Africa watchers, investors have been leery of the potential for a downgrade for some time, largely because of the faltering economy. Under normal circumstances, a ratings cut of South Africa's magnitude would have prompted widespread portfolio adjustments by big investors.

"This is a very South Africa-specific story in terms of its unique political dynamics," James Barrineau, head of emerging market debt with investment manager Schroder's told CNBC recently.

"We expect some forced selling of South Africa from funds that can hold only investment-grade rated credits; however much of this was anticipated by the markets and occurred immediately following the news that Gordhan would be out," Barrineau added.

Not out of the woods yet