S&P affirms South Africa's investment grade credit rating

S&P Global Ratings on Friday affirmed South Africa's investment-grade credit rating and kept its negative outlook, pushing the rand higher.

S&P affirmed the rating on the sovereign debt of Africa's most industrialized country at BBB-, but warned that the outlook remained negative, reflecting the potential adverse consequences of low GDP growth.

"The outlook remains negative, reflecting the potential adverse consequences of low GDP growth and signalling that we could lower our ratings on South Africa this year or next if policy measures do not turn the economy around," S&P said in a statement.

Table Mountain, Cape Town
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Table Mountain, Cape Town

The rand extended earlier gains to trade at 15.0600, up more than 3 percent on the day.

South Africa's Treasury welcomed the decision by S&P, saying it would give government more time to demonstrate the concrete implementation of economic reforms.

"The benefit of this decision is that South Africa is given more time to demonstrate concrete implementation of reforms aimed at achieving higher levels of growth and place public finances on a sustainable path," Treasury said in a statement.

A cut to below investment grade would have pushed up Pretoria's borrowing costs, making it harder to plug a budget deficit estimated at 3.2 percent of GDP in the 2016/17 financial year.