20 November 2017

South Africa: Eskom Working to Avert Rating Downgrade

Photo: EskomSouthAfrica
(file photo).

Eskom has noted that Fitch Ratings has placed it on a rating watch negative and is working to avert a downgrade.

"Fitch Ratings has placed Eskom's long-term local currency Issuer Default Rating (IDR) and unguaranteed local currency senior unsecured ratings of 'BB+' on Rating Watch Negative (RWN)," said Eskom on Friday.

The agency has affirmed the government-guaranteed local currency senior unsecured debt ratings at 'BB+' and also placed the national long-term rating of 'AAA' and National short-term rating of 'F1+' on RWN.

Eskom's interim Group Chief Executive Sean Maritz said the support the entity has received from the Minister of Public Enterprises to appoint the remaining board of directors will demonstrate commitment to enhance Eskom's corporate governance structure.

"We remain focused on improving corporate governance to address liquidity challenges in the near term to avert a downgrade. We note the decision by Fitch to place Eskom's IDR on RWN and this reflects the need for the ratings agency to assess Eskom's links to the government given weakening liquidity and funding access.

"Eskom is confident that the liquidity challenges it faces will be resolved and the funding initiatives planned until the end of the financial year will alleviate the pressure," said the utility's acting Chief Financial Officer Calib Cassim.

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