South Africa: More Junk - Fitch Pushes Eskom Deeper Into the Scrap Heap

analysis

In the wake of the downgrade action it took last week on South Africa's credit rating - taking it further into junk territory - it is no surprise that Fitch has now also downgraded Eskom. Ratings agencies simply do not see any light at the end of Eskom's debt tunnel, especially in the face of government policy inertia.

Fitch noted in a statement that Eskom's turnaround plan was "progressing slowly".

This is a persistent problem: the government simply cannot get the ball rolling on the reforms it needs to implement to improve its finances and the economy.

"Eskom's plan to create separate business divisions is progressing gradually and the company expects the separation of generation, transmission and distribution entities will enable them to focus on their respective business, including lowering carbon intensity as well as financing activities such as accessing Green financing.

"However, there is no clarity on the final credit linkages between the three entities and the parent company once this unbundling is complete," Fitch said.

This is another recurring theme: the lack of clarity. That translates into "uncertainty", which is hardly going to entice lenders to open their wallets. Or investors for that matter.

On that note, Fitch...

More From: Daily Maverick

Don't Miss

AllAfrica publishes around 600 reports a day from more than 130 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.