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It may be too soon to talk about a South African rating upgrade. While Fitch\u00a0affirmed\u00a0its stable outlook and rating assessment on Thursday, and S&P Global Ratings unexpectedly revised its outlook on the country\u2019s debt to positive, from stable, in May, South Africa\u2019s position remains challenging.<\/p>\n
\u201cWe need to just clarify what a positive outlook means in our world,\u201d Omega Collocott, S&P\u2019s director of corporate ratings for South Africa, said in an interview with Bloomberg News.<\/p>\n
A positive outlook from S&P for a below-investment grade like South Africa means there\u2019s a one-third chance of a higher rating move in the next 12 months, Collocott said.<\/p>\n
On S&P\u2019s radar for South Africa\u2019s next assessment are global interest rates, inflation, the Russia-Ukraine war and demand for commodities, said Ravi Bhatia, director and lead analyst for S&P in Africa.<\/p>\n
\u201cOne important factor for the macroeconomic outlook is what happens in China,\u201d Bhatia said. \u201cIf the lockdowns in China continue, that could be a downside risk for commodity demand.\u201d<\/p>\n
On the domestic side, Bhatia said South Africa was not getting the full benefit of higher commodity prices because of infrastructure bottlenecks that are partially \u201cself-inflicted.\u201d<\/p>\n
\u201cWe are also monitoring load shedding, the infrastructure bottlenecks, and the political developments, for what it may mean for the macroeconomic outlook,\u201d he said.<\/p>\n
In its statement on Thursday, Fitch Ratings warned of risks posed by the poor finances of many public enterprises.<\/p>\n
Assessments of South Africa\u2019s debt from the three major ratings firms are the lowest since the country first obtained credit ratings in 1994. Moody\u2019s Investors Service pegs the nation at two steps below investment grade while S&P Global and Fitch both rank the country three notches below.<\/p>\n