Moody’s Investors Service (Moody’s) has affirmed Eskom’s credit rating of Ba1 with a negative outlook this after the rating agency affirmed South Africa’s sovereign credit rating.
“Following the affirmation of the sovereign credit rating by Moody’s last week, the ratings agency has moved to affirm Eskom’s credit rating of Ba1, with a negative outlook,” said Eskom on Tuesday.
In March 2016, Moody’s had placed Eskom on review for a potential downgrade. The downgrade was averted with the affirmation of the Ba1 credit rating, indicating the possibility for Eskom’s outlook to be revised to stable if the company continues to improve and stabilise its operational and financial performance.
Moody’s cited Eskom's strategic importance to government's social and economic policy, and the prospect of high level government support in the event of financial distress, as the basis for its decision to affirm Eskom’s credit rating.
Eskom Chief Financial Officer Anoj Singh said the power parastatal is pleased with the decision.
“We are pleased that the rating agency has affirmed Eskom’s credit rating. Removing Eskom from a review for downgrade status demonstrates the commitment by Eskom and government to stabilise the company’s operational and financial profile.
“Eskom will continue to implement initiatives that will ensure that the company achieves long-term financial sustainability, while moving towards an improved credit profile,” said Singh.
To date, Eskom has received financial support from government in the form of a R350-billion Government Guarantee Framework Agreement; the R60-billion shareholder loan, which was converted into equity in 2015, and the recent R23-billion equity injection received by the company in the 2015/16 financial year. - SAnews.gov.za