South Africa's credit rating, an agency's verdict on how likely the government is to repay what it borrows, has sat below the line investors call investment grade since 2020. Moody's rates the country Ba2, two notches under that line, and has had it on a positive outlook since May. Both Moody's and S&P review the rating on 27 November, with Fitch following on 11 December.
An upgrade from either of the first two would lift South Africa one notch, onto the last rung below investment grade. That is still junk. It would simply put the exit in sight.
Moody's or S&P: where the banks are betting
Bank of America's economists think Moody's is the likelier agency to act, moving the country to Ba1, with an S&P upgrade a closer call. Morgan Stanley has it the other way round, expecting S&P next month and Moody's early in 2027. Goldman Sachs also expects S&P to move on 27 November, and sees a possible upgrade from Moody's too. Across Bloomberg's survey of 11 economists, only four expect an upgrade before the end of the year. The other seven think it comes in 2027.
Moody's has dropped the clearest hint. "We could upgrade South Africa's rating if fiscal performance continues to improve," vice president Evan Wohlmann told a media briefing last week, and it would be the agency's first upgrade of the country since 2009. By its own track record, Moody's upgrades about 60% of the countries it puts on a positive outlook.
What the mini-budget has to show
Finance Minister Enoch Godongwana delivers his medium-term budget at 2pm in Cape Town today. Economists expect it to show government debt, measured against the size of the economy, falling for the first time in more than two decades.
Tax money has helped. Corporate tax receipts jumped 22.8% in the first five months of the financial year on strong mining profits, BNP Paribas says. Goldman Sachs reckons revenue could beat the Treasury's projections by R40 billion, though both banks expect the Treasury to count only a quarter to half of that windfall. Reuters lists what could eat into it: record fuel prices, with inland petrol above R30 a litre for the first time this month, weak growth and pressure to spend before the 4 November local government elections.
Investors get the numbers at 2pm today. The agencies' reviews follow five weeks later.
