CREDIT rating agency S&P said on Tuesday it was not anywhere near to upgrading South Africa from its “junk” status.

S&P Global Ratings’ Sovereign Analyst, Gardner Rusike said this in Johannesburg ahead of a rating review scheduled for May 25.

Rusike said the future rating path would be influenced by whether new President Cyril Ramaphosa follows through on promises to reform the economy.

“We are now probably in a good situation that supports our stable outlook, but we are not yet anywhere near going upward as far as the rating is concerned.

“What would provide upside potential is further strengthening of economic performance.

“As we have indicated, we are now in a positive per capita growth rate but we need to be in a much stronger per capita rate that is closer to the average,” Rusike said.

According to him, the stronger per capita economic growth, and faster debt stabilisation can lift ratings in future.

S&P rates South Africa’s foreign currency debt ‘BB’ and its local currency debt ‘BB+’, having downgraded the country to below investment-grade in 2017.

The agency cited deterioration in the economic outlook and public finances as reasons for the downgrade.

Ramaphosa’s replacement of scandal-plagued Jacob Zuma as president in February and his promises to fight corruption and reform the economy to spur growth have revived optimism about South Africa.

However, another of the “big three” rating agencies, Moody’s, upgraded South Africa’s outlook to ‘stable’ and kept its rating at investment grade on Friday.

An investment-grade rating widens the pool of potential investors in a country’s debt and lowers its borrowing costs, a significant factor for South Africa which has large budget and current account deficits to finance.

Ramaphosa welcomed Moody’s decision on Tuesday. “The decision by Moody’s not to downgrade us any further is a great shot in our arm.

“We can now face the other rating agencies and get them to begin to review the negative rating they may have given us,” Ramaphosa said at the launch of a youth employment initiative. (Reuters/NAN)

– Mar. 27, 2018 @ 17:07 GMT |