South Africa is on track to regain its investment-grade credit rating within two years, according to Investec Wealth & Investment International. The fund manager sees a more than 50% chance the country will restore its investment-grade status by 2028, driven by economic reforms and fiscal discipline. Both Moody’s Ratings and S&P Global Ratings currently have South Africa’s credit assessment on a positive outlook.
Finance Minister Enoch Godongwana is set to deliver the mid-term budget on Oct. 21, which is expected to show continued growth in the primary budget surplus and outline a fiscal framework to control government debt. Investment strategist Osagyefo Mazwai stated that a credible medium-term budget policy statement could prompt an initial upgrade by Moody’s and S&P to one notch below investment grade. If progress is reinforced in the 2027 budget, an investment-grade rating by 2028 becomes achievable.
Credit-default-swap spreads suggest markets are anticipating imminent upgrades. Moody’s, which rates South Africa Ba2, said the country is headed for its first credit-rating upgrade since 2009, provided fiscal performance continues to improve. The nation lost its investment-grade assessment in 2020, but recent Treasury success in keeping the budget on track and the central bank lowering its inflation target to 3% have improved investor sentiment.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing