Eskom says it views Fitch Rating's decision to upgrade its credit ratings, in line with the recent improvement in South Africa's sovereign credit rating as continued recognition of the utility's central role in the country's energy system.
In a statement on Friday, the power utility announced that it had noted the decision to upgrade its credit ratings, in line with the recent improvement in South Africa's sovereign credit rating.
Fitch Ratings has upgraded Eskom's credit ratings as follows:
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· Long-Term Issuer Default Ratings: upgraded to B+ from B; Outlook Stable;
· Senior unsecured debt: upgraded to B+ from B; Recovery Rating of RR4 unchanged; and
· guaranteed senior unsecured debt: upgraded to BB from BB-.
The rating action follows the recent upgrade of the Republic of South Africa's sovereign credit rating and reflects Eskom's strong linkage to the sovereign under Fitch's Government-Related Entities rating methodology.
The upgrade also comes at a time when Eskom continues to stabilise its operations and strengthen financial management under its ongoing turnaround plan.
Fitch has assessed the relationship between Eskom and the South African government as "strong across key support factors, including oversight, policy role, and the precedent of support, with Eskom's rating positioned below the sovereign in line with this framework," said Eskom.
Eskom Group Chief Executive, Dan Marokane, said the utility's focus remains on execution.
"We continue to implement our turnaround strategy at pace to restore operational and financial stability, maintain energy security, and position Eskom for sustainable long-term growth that supports the economy. Eskom, and in turn South Africa, now has a stable electricity platform to operate and grow from, advancing grid stability, market liberalisation and the integration of renewable energy," Marokane said.
The Group remains focused on strengthening operational performance, improving liquidity and access to funding, and delivering on its turnaround plan in support of long-term financial sustainability.
"Eskom views the upgrade as a positive signal of improving macroeconomic conditions and continued recognition of the utility's central role in South Africa's energy system," it said.
Earlier this month, government Fitch's decision to upgrade South Africa's long-term foreign and local currency credit ratings to 'BB' from 'BB-' and maintain the stable outlook.
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Read| Government welcomes Fitch rating upgrade
According to Fitch, the upgrade reflects South Africa's record of prudent fiscal management and its progress on fiscal consolidation, despite weak economic growth and domestic and external shocks.
