Markets are not pricing in the probability of South Africa recovering its investment-grade status, leaving room for gains in government bonds, equities and the rand, according to Goldman Sachs Group Inc, one of the world’s largest and most influential multinational investment banking and financial services groups.
The country could regain investment-grade status as early as 2028, as credit rating agencies acknowledge improvements in public finances and economic growth, Goldman Sachs analysts — including economist Andrew Matheny — wrote in a research note.
“Our baseline forecast is that South Africa recovers its first investment-grade rating in 2028, although risks exist in both directions regarding timing,” Matheny said. “At this stage, in our assessment, markets are largely not pricing in that possibility.”
The Goldman Sachs analysis indicates that the yield on South Africa’s 10-year local-currency government bonds could fall by more than 100 basis points to 7.6%, while the sovereign spread — the yield premium on dollar-denominated bonds over US Treasuries — could tighten to levels in line with investment-grade emerging markets. Five-year credit default swaps (CDS), which stood at around 116 basis points on Tuesday, could pull back to approximately 100 basis points, the analysts wrote.
“Given the larger price appreciation seen so far in fixed income relative to equities, we see comparatively greater structural upside in the latter over time, should macroeconomic improvements continue,” the analysts wrote.
The team also estimates an appreciation potential of around 9% for the rand against the dollar, based on its fair-value estimate. However, “the realisation of this potential depends in part on broader dollar behaviour,” they wrote.
Africa’s largest economy was downgraded to sub-investment grade in 2017, when growth was slowing and public debt was rising sharply. However, improving public finances, economic growth and the policy framework are expected to drive further credit rating upgrades over the coming year, according to the analysts.
S&P Global Ratings and Moody’s Ratings currently rate South Africa at BB and Ba2, respectively — both two notches below investment grade. Both agencies maintain a positive outlook on South African debt, signalling that an upgrade is likely.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/09/03/mundo/africa/africa-do-sul-goldman-sachs-preve-regresso-ao-grau-de-investimento-em-2028/
