Bank of America (BoA) has pointed to a potential credit rating uplift for SA, arguing that improving growth prospects and falling debt ratios could pave the way for a sovereign upgrade by S&P in November, provided the GNU holds.
In May, S&P affirmed SA’s BB- rating with a stable outlook, warning that growth and fiscal challenges persist, yet acknowledging the potential for an upgrade should the government’s reforms gain traction and the debt-to-GDP ratio stabilise.
“S&P could upgrade SA to BB in November 2025 on higher GDP growth and declining debt to GDP … 2025 looks set to be a stable year for the GNU [government of national unity], allowing it to push ahead with reforms,” the lender said in an update to investors.
The review comes as investors adjust their view of emerging-market risks due to changing US interest rates. The markets calmed earlier this year after GNU parties resolved a protracted disagreement over the 2025/26 national budget.
The BoA assessment coincides with the conclusion of a two-day retreat by the 10 leaders of the political parties in the GNU.
GNU ‘united and strong’
In a statement issued after the meeting, party leaders said, “The leaders were unanimous that the GNU is united and strong,” adding that the coalition “has provided stability and leadership to the country”.
They further declared that “the GNU is now more cohesive, determined and focused than ever before”.
The retreat, attended by President Cyril Ramaphosa, deputy president Paul Mashatile and leaders from across the unity government, sought to deepen alignment on fiscal priorities, governance reforms and implementation capacity.
Downside risks to the potential improved credit rating include an unstable GNU, uncertainty about US trade policy, and persistent domestic challenges.
These include weak public finances, slow fiscal consolidation and structural weaknesses in energy and logistics that continue to constrain economic growth and weigh on the country’s terms of trade.
S&P is the only major credit ratings agency with different ratings for SA. It rates SA’s foreign currency debt at BB−, three steps into junk status, while local currency debt is rated slightly higher at BB.
This is because the government is better able to repay debt in rand, thanks to SA’s large, well-developed domestic financial market, where most borrowing occurs.
A ratings upgrade would turn the cycle after years of downgrades, which began in 2012 and culminated in the last of the big three ratings agencies, Moody’s, cutting SA to junk status as the Covid-19 crisis hit in March 2020.
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