Africa’s sovereign credit ratings 2025: How Moody’s, S&P, Fitch are repricing risk

As the year draws to a close, speculation about the credit stability of African economies is rife, and this is both significant and noteworthy, as some countries reflect fairly strong economic indices, a few are exhibiting resilience in the face of challenges, and others are battling to maintain stability after years of external shocks.

Africa heads into 2026 with credit assessments that reflect a continent moving at different speeds. Ratings from Moody’s, S&P Global Ratings, and Fitch Ratings now show a wider gap between countries with momentum and those still trying to stabilise after years of economic irregularities.

Higher global interest rates, refinancing pressures, and tight external liquidity continue to shape how these seminal agencies view African sovereigns, outlining the parameters that investors will use to distinguish between reformers and countries still trapped in debt stress.

A collection of factors has not made credit ratings straightforward. As several large Eurobond maturities approach, rating agencies weigh refinancing risk heavily in their assessments. Rate cuts in advanced markets have been slower than expected, leaving African governments facing costly borrowing conditions.

Also, IMF programmes have become a central reference point for all three firms; African countries with structured reforms and predictable financing typically receive more stable credit assessments. This creates a clear divide between Africa’s larger, steadier economies and those still under significant strain.

How the Rating Categories Work

Credit ratings are essentially a “financial report card” for companies and governments. They tell investors how likely a borrower is to pay back its debt. Moody’s, S&P Global Ratings, and Fitch (The Big Three) each use slightly different scales, but the logic is the same: higher letters mean lower risk. Their categories fall into three broad groups investors pay attention to.

Credit ratings sit at the centre of how investors engage with African sovereign debt. According to Rainer Dzoesch, an economic analyst at the German-Angolan Economic Initiative (Iniciativa Económica Alemanha-Angola), “Credit ratings remain a core input for mandates, indices, and risk models. They influence whether sovereigns can issue, the maturities available, and the spreads they must pay.”

Investment Grade

This is the safe zone. Countries here are seen as having a strong ability to repay their debts.

• Moody’s: Aaa to Baa3
• S&P and Fitch: AAA to BBB-

Only a handful of African sovereigns come close to this range. Morocco and Botswana, alongside Mauritius and South Africa, are the most consistent.

Sub-Investment Grade (also called “High Yield” or “Junk”)

Most African economies fall here. It signals higher risk but still recognises a government’s willingness and capacity to pay, even if the path is rough and uncertain.

The OECD Africa Capital Markets Report 2025 has pointed out that around 80% of rated African sovereigns are high‑risk, and only a tiny fraction achieves investment‑grade status. According to the report, “Since the commodity boom in the mid-2010s, credit quality has deteriorated in Africa, with high-risk countries representing nearly 80% of the rated countries at the end of 2024.”

• Moody’s: Ba1 to Caa
• S&P and Fitch: BB+ to CCC

This category includes countries like Nigeria, Kenya, Angola, and Côte d’Ivoire.

Distressed and Default Range

These ratings signal that a government is struggling to meet obligations or has already entered restructuring.

• Moody’s: Ca and C
• S&P and Fitch: CC, C, and SD (Selective Default)

Ghana, Zambia, and Ethiopia have all fallen into this zone because of heavy debt burdens and missed payments.

This structure helps investors compare countries quickly, and it shapes how much governments pay to borrow on global markets.

Big Economies: Holding their ground, amidst slow progress

Nigeria

Nigeria remains high on the radar for Moody’s (B3), S&P (B-), and Fitch (B) because of its size and reform agenda. All three agencies keep the sovereign in the low B investment grade category, reflecting a mix of pressure and potential, but rated stable.

Reacting to Moody’s upgrade of the sovereign from Caa1 to B3, President Bola Ahmed Tinubu said, “This upgrade signals to global investors and partners that Nigeria is back on a path of responsibility, reform, and renewed credibility.”

Exchange rate unification, higher oil output, and fiscal reforms have stopped the downward drift seen in earlier years. Still, inflation, FX shortages, and a wide financing gap prevent a more optimistic stance.

Mauritius

Mauritius remains one of the few African sovereigns consistently rated investment grade by the major agencies, sitting at the lower end of that bracket with Moody’s (Baa3) and S&P and Fitch (BBB-).

The ratings reflect a diversified economy, relatively strong institutions, and a long record of macroeconomic stability compared with regional peers, underpinning Mauritius’s position as a benchmark low-risk African credit for investors.

But the agencies also flag clear constraints, including elevated public debt following the pandemic and exposure to external shocks through tourism and global financial conditions.

Morocco

Morocco stands out as one of the brightest spots in Africa’s rating map. Moody’s (Ba1), S&P (BBB-), and Fitch (BB+) rate the country around the investment-grade threshold, thanks to consistent growth drivers in tourism and manufacturing and a stable political environment.

The agencies see Morocco as well-positioned with a stable outlook for gradual upgrades if fiscal consolidation continues. In a continent where many peers remain in the lower B category, Morocco’s relative stability gives it a clear advantage with investors.

South Africa

South Africa has been stuck in sub-investment grade for years, and 2025 offers little movement. Its S&P upgrade from BB- to BB in late November was notable because it was South Africa’s first sovereign rating upgrade in nearly two decades.

“We’ve been in decline for the last 10 years, so this possibly signifies a turning point,” chief investment officer of Cape Town-based Aeon Investment Management, Asief Mohamed said.

Nevertheless, Moody’s, S&P, and Fitch all highlight the same issues: weak growth, heavy debt-service costs, and structural bottlenecks linked to electricity and logistics.

Angola

Angola’s ratings from the three major agencies sit in the B to B- zone, signalling a credit that has improved but still faces vulnerability. Moody’s, S&P, and Fitch point to progress in trimming debt levels, strengthening non-oil revenue, and improving FX management.

The sovereign remains heavily exposed to oil price swings, which the agencies consistently flag as a risk. Still, Angola’s reform efforts have earned it a more favourable outlook than several other commodity-dependent peers.

Egypt

Egypt sits at the fragile end of the spectrum, with Moody’s and S&P placing it in the B to CCC range and Fitch also holding a distressed-level rating. However, all three firms acknowledge that IMF-backed reforms, FX liberalisation, and large inflows from Gulf partners have stabilised the near-term outlook.

According to Ibrahim Hassan, a financial analyst at the National Bank of Egypt, the country’s S&P upgrade from B- to B “reflects the country’s economic improvement.” The agencies emphasise the country’s large external financing needs, which still pose major risks.

Egypt’s rating trajectory through 2026 will depend on how quickly new financing arrives and whether inflation continues to ease.

Challenged Economies: Restructuring and Fiscal Gaps

Botswana

While not a big economy, Botswana is rated quite favourably credit-wise by the Big Three. The sovereign clinched a Baa1 rating from Moody’s and BBB by S&P.

Despite having a history of performing well credit-wise, Moody’s downgraded Botswana’s rating from A3 to Baa1 in October 2025 and maintained a negative outlook, reflecting pressures from a prolonged downturn in the diamond industry and rising government debt, though the rating remains investment grade.

According to S&P analysts Ravi Bhatia, Riccardo Bellesia, and Leon Bezuidenhout, “subdued global demand and depressed diamond prices are likely to keep Botswana’s fiscal consolidation challenging”.

Côte d’Ivoire

Côte d’Ivoire continues to earn BB-range ratings from all three agencies, supported by strong growth and a solid record in the Eurobond market. However, Moody’s, S&P, and Fitch all point to rising debt-service costs as a concern. However, the agencies expect growth to remain strong.

Ghana

Ghana, hovering in the C and B range across all three agencies, continues to rebuild after its restructuring. Moody’s, S&P, and Fitch all highlight the same factors behind the weak rating: high debt, elevated inflation, and reliance on IMF support. The agencies welcome the progress made through the domestic debt exchange, but they remain cautious about fiscal discipline.

Zambia

After several years of drawn-out debt restructuring, Zambia’s sovereign ratings in 2025 sit firmly in the high-risk category, though no longer uniformly in default. S&P has moved the country out of selective default into the CCC range, while Fitch and Moody’s place it in low single-B/ high-Caa territory, reflecting progress but still-elevated credit risk.

Kenya

Kenya faces ratings in the Caa and B range from the three major firms. Moody’s and Fitch have repeatedly flagged high interest costs, reliance on external rollovers, and a rising debt-service burden. S&P also notes the country’s heavy dependence on non-concessional borrowing.

Ethiopia

Ethiopia’s sovereign ratings in 2025 remain in the distressed range, spanning selective or restricted default to the low-CCC level, depending on the agency and treatment of unresolved external arrears. S&P and Fitch continue to flag default-related risks linked to missed external payments and the slow progress of debt treatment under the G20 Common Framework, while Moody’s keeps the country deep in Caa territory, reflecting very high credit risk.

*** Rating Outlooks

Positive means that a rating may be raised.

Negative means that a rating may be lowered.

Stable means a rating is not likely to change.

Perceived Bias in Ratings by the Big Three

For years, African policymakers and analysts have pushed back against the way the Big Three credit rating agencies assess sovereign risk on the continent, arguing that the current system often paints a skewed picture of African economies.

This subjectivity has translated into higher borrowing costs, with African nations paying, on average, about 1.5 percentage points more than countries with similar fundamentals, according to a joint study by the UNDP and AfriCatalyst.

Citing the difference in credit ratings for African countries and other parts of the world as “perception bias”, Dr. Julius Kirimi Sindi, a seasoned economist, notes, “When African countries systematically pay higher rates than peers with identical credit ratings, when they’re downgraded more aggressively during crises, when their reforms are recognized more slowly… is that risk assessment or something else entirely?”

At the 2025 G20 Summit, economists and former finance officials called for greater oversight of rating methodologies, arguing that opaque criteria and inconsistent consultations compound the perception that Africa is a higher-risk region. On their part, these agencies continue to reject claims of regional bias.

A deeper dive into this can unlock perspectives that support or negate these claims and their nuances.  

Regional Trends and Investor Takeaways

As 2025 ends, African sovereign ratings largely cluster in the B category, reflecting common challenges such as tight liquidity, high borrowing costs, and dependence on commodity exports.

This convergence makes differentiation difficult for investors, placing greater emphasis on specific policy reforms, credible IMF programmes, and external support. Refinancing risk, particularly from upcoming Eurobond maturities, is another key driver shaping outlooks.

Heading into 2026, rating trajectories will hinge on global monetary policy, exchange rate stability, commodity prices, and debt management. Countries that strengthen revenues, stabilise foreign exchange conditions, and control debt-service costs are best positioned to improve their credit profiles.

For investors, the most important indicator is not just the current rating, but whether governments are taking the steps to shift their sovereigns toward greater resilience.