South Africa’s top corporates show resilience amid structural and cost pressures — Moody’s

SOUTH Africa's largest listed companies are demonstrating resilience despite facing persistent structural challenges high borrowing costs, and infrastructure bottlenecks, according to analysts at Moody’s Investors Service.

- TAWANDA KAROMBO

While the country’s economy remains constrained by weak growth, high unemployment, and ongoing energy and logistics challenges, blue-chip corporates on the JSE continue to leverage strong balance sheets and diversified funding strategies to weather the difficult environment.

“These are diversified, blue-chip corporates with access to international financing as well, though more domestic than international,” said Iker Ballestero Barrutia, corporate finance analyst at Moody's. “But this varies significantly by sector and company size.”

Despite improved access to capital through local and international markets, the cost of capital has risen significantly over the past five years. A recent decline in benchmark interest rates is beginning to ease pressures though.

Despite some improvements, power supply issues still persist although ongoing inefficiencies in logistics infrastructure — particularly in South Africa’s ports and rail systems — remain as key constraints to growth.