Johannesburg - South Africa might be just hours away from losing its investment-grade at S&P Global Ratings - a relegation that could take years to undo.



With a credit assessment due on Friday, the country’s foreign-currency debt is at risk of being rated junk by S&P for the first time in more than 16 years. Only six of 20 countries reduced below investment grade by S&P over the last three decades have regained it, and that took from 13 months to more than 11 years, data compiled by Bloomberg show. Seven of 12 economists surveyed by Bloomberg last month said the nation’s foreign-currency rating will be downgraded to junk on Friday, while three foresee it happening in June.



Political turmoil in Africa’s most-industrialised economy, including now-dropped fraud charges against Finance Minister Pravin Gordhan, has overshadowed efforts to boost investor and business confidence.

The slowest gross domestic product growth this year since a 2009 recession will complicate Gordhan’s pledge to narrow the budget deficit and to limit government debt, while promised structural reforms have been hampered by infighting in the ruling African National Congress and government departments.



“If South Africa does get a downgrade, I think we are looking at at least three to five years before it could possibly get upgraded again,” Per Hammarlund, chief emerging-market strategist at SEB SA in Stockholm, said by phone. “Given the way politics are moving now, it seems as if the political paralysis will continue and that doesn’t bode well for economic reforms.”

Negative outlook