Goldman Sees 2028 as Potential Timeline for SA Investment-Grade Return

Goldman Sachs Group Inc. is predicting that South Africa will regain its investment-grade status by 2028, which could lead to a rally in government bonds, stocks, and the rand.

The country was cut to junk in 2017 due to slowing growth and soaring public debt, but analysts at Goldman see improvements in the fiscal picture, growth, and policy backdrop driving credit upgrades over the next year.

Ratings companies S&P Global Ratings and Moody's Ratings currently assess South Africa at BB and Baa2 respectively, two levels below investment grade. Both have a positive outlook on the debt, suggesting an upgrade is likely.

The Goldman team led by economist Andrew Matheny believes that markets are not pricing in the probability of South Africa's return to investment-grade status, leaving room for government bonds, stocks, and the rand to rally.