Abstract
The transition of Bretton-Hoods Institutions from being providers of concessionary funding
into brokers of private capital implies that credit ratings have become the lynch pin to capital access.
The study critically investigates whether the determinants of credit ratings identified in literature are
relevant to South Africa. Single country studies that identify the drivers of rating scores in South Africa
are scant. Fitch and Standard and Poor ratings are collected for the 22 years ending 2022. Binary
framework econometric approach with the use of logit regression methods was adopted. Given the
binary nature of the dependent variable, a non-linear formulation that forces the predicted values to be
between 0 and 1 is desirable. Across the two international credit ratings, the explanatory power of the
estimated models has good performance. Evidence is provided in the study that six macroeconomic
variables drives credit ratings in South Africa. The variables are the balance of payment, current account
balance, inflation, ratio of foreign debt to GDP, gross domestic product, and the ratio of house-hold
debt to disposable income. The exchange is not an essential determinant of sovereign ratings in South
Africa. Based on the empirical findings of the study, it is recommended that the government of South
Africa should implement policies that stabilizes macroeconomic fundamentals. Structural production
bottlenecks need urgent attention to enhance the investment attractiveness of the country and boost
GDP. Furthermore, the study recommends that the government institute measure to stabilise debt levels
at both national and household level.