Power utility Eskom has noted rating agency Moody’s credit rating downgrade, saying it remains resolute to turn its fortunes around.
“We note the decision by Moody’s to downgrade the company’s rating. However, we remain resolute in our endeavours to progressively turn this company around,” said the power utility on Friday.
Moody’s Investor Services downgraded the utility to ‘B1’ from ‘Ba3’. The State-owned entity’s zero coupon eurobonds rating was similarly revised to ‘B1’ from ‘Ba3’, in line with the corporate family rating (CFR) and the global medium-term note (GMTN) programme. The senior unsecured GMTNs of Eskom have been downgraded to ‘(P)B2/B2’ from ‘(P)B1/B1’.
All of Moody’s ratings remain under review for further downgrades.
While the agency views recent interventions at the utility -- including the appointment of a new board by Deputy President Cyril Ramaphosa -- as favourable actions in bolstering the credit quality of Eskom, Moody’s cited Eskom’s deteriorating liquidity and the ability of government to provide direct equity support to Eskom.
“The liquidity concerns raised by Moody’s are starting to dissipate, as we are already seeing investors and lenders revive their engagements and commitment to Eskom. We see this action by Moody’s as a low point in the credit profile of Eskom and we are confident that we are on a path to recovery. Supported by the new board, the governance and leadership at Eskom is being stabilised to bolster the turnaround of the company,” said the utility.
Eskom acting Chief Financial Officer, Calib Cassim, said the company remains hopeful of turning its liquidity position around.
“We remain cautiously enthusiastic that we are geared towards improving the company’s liquidity position and financial profile. We are acutely aware of the challenges that Eskom is confronted with. However, we are confident that we are on the verge of restoring a positive market sentiment that will assist with the execution of our funding plan,” said Cassim.
In November, Standard & Poor’s (S&P) lowered Eskom’s long-term foreign and local currency corporate credit rating to ‘B-‘ from ‘B+’, with a negative outlook. S&P has simultaneously revised Eskom stand-alone credit profile (SACP) to ‘ccc-' from ‘ccc+’.
In the same month, Moody’s downgraded to ‘Ba3’ from ‘Ba2’ the long-term CFR of Eskom. - SAnews.gov.za
