South Africa's credit gets marked three times before Christmas. Moody's and S&P review the country on 27 November and Fitch follows on 11 December, and in the past few days two of them have said what they made of last week's mini-budget. They did not say quite the same thing.
All three currently rate South Africa two notches below investment grade, the line many of the world's most cautious investors want a country above before they lend to it. Moody's and S&P have the country on a positive outlook, which Treasury said in June meant they could look to upgrade within 12 to 18 months. Fitch moved first, lifting its rating one notch to BB in June, and kept its outlook stable.
What Moody's liked
Moody's statement read close to applause. It praised the government's progress in narrowing the deficit despite dearer oil, tighter monetary policy and slower growth than the February budget assumed, and noted this is the second mid-term budget in a row without an upward revision to the deficit. Revenue came in ahead of plan across the board, which let Treasury trim its 2026/27 deficit target to 3.9% of the economy, from 4%.
On debt, Moody's says the peak has passed, with a "clear, albeit gradual" decline ahead, and its measure counts most of the government's guarantees to state companies. It also warned that South Africa has limited room to absorb shocks.
Whether that becomes an upgrade is another matter. Bank of America, in a recent note, named Moody's the agency most likely to act, with a possible move up one notch to Ba1, and called an S&P upgrade to BB+ a closer call. Some economists think a November upgrade is unlikely.
Fitch's extra year
Fitch agrees with part of the story. It still expects debt to settle at about 78% of GDP for the next two financial years, roughly 78 cents owed for every rand the economy produces in a year. After that the paths split: "unlike the government," Fitch said, it expects debt to "very modestly rise again" in 2028-29, to 79%. Treasury's own numbers have debt peaking at 78.4% in 2025-26 and easing to 76.6% by 2029-30.
The gap between those two paths is a couple of percentage points, several years out. It is also the difference between a debt pile that has turned and one that has only paused, and Fitch, which goes last, will set out which it believes on 11 December.
