Goldman Sachs Sees South Africa Regaining Investment Grade Rating by 2028

Goldman Sachs has made a bullish prediction about South Africa's credit rating. Analysts at the investment bank believe that the country could regain its first investment-grade rating by 2028, following years of fiscal and economic improvements.

The country's median credit rating fell from BBB+ to BB- between 2010 and the early 2020s due to slowing growth and increasing public debt. However, Goldman Sachs notes that there have been significant improvements in recent years, including narrowing fiscal deficits, declining public debt, increased growth, and eased supply constraints in electricity and transport.

The investment bank expects upgrades from S&P and Moody's over the next year, moving ratings from BB/Ba2 to BB+/Ba1. Markets do not currently price in a return to investment grade, according to Goldman Sachs, which sees scope for 10-year bond yields at 7.6%, down 110 basis points, and 5-year CDS spreads at around 100 basis points, down 20 basis points.