Moody\u2019s Investors Service has affirmed Eskom\u2019s credit rating with a negative outlook, following the affirmation of the country’s sovereign credit rating.<\/p>\n
The power utility was placed on review for a potential downgrade in March.<\/p>\n
“The confirmation of Eskom’s Ba1 senior unsecured ratings reflects the expected stabilisation of the South African government’s credit profile”, Moody’s said.<\/p>\n
The rating agency said Eskom’s senior unsecured bond ratings are primarily driven by Moody’s estimate of a high level of potential government support in case of financial distress.<\/p>\n
Moody’s noted that Eskom was already benefiting from a R350n Government Guarantee Framework Agreement, as well as a R60bn shareholder loan, which was converted into equity in 2015 and the recent R23bn equity injection received by the company during the the 2015\/16 financial year.<\/p>\n
It added that Eskom\u2019s outlook could be revised to stable if the company continued to improve and stabilise its operational and financial performance.<\/p>\n
Eskom said on Tuesday that it was pleased with Moody’s decision.<\/p>\n
“Removing Eskom from a review for downgrade status demonstrate the commitment by Eskom and the government to stabilise the company\u2019s operational and financial profile,” said chief financial officer Anoj Singh in a statement.<\/p>\n
“Eskom will continue to implement initiatives that will ensure that the company achieves long-term financial sustainability while moving towards an improved credit profile.\u201d<\/p>\n
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