Eskom on Wednesday noted rating agency Standard and Poor’s Global Ratings (S&P)’s decision to downgrade the utility’s rating to ‘CCC+’ largely due to its current liquidity challenges.
“Eskom notes the decision by S&P to downgrade Eskom’s long-term foreign and local currency corporate credit rating to ‘CCC+’ from ‘B-’; outlook remains negative,” said the utility.
The review of Eskom’s credit rating is largely based on S&P’s assessment of the assumed likelihood of sufficient and timeous government support for Eskom from ‘very high’ to ‘high’, given the company’s current liquidity challenges.
Eskom’s Interim Group Chief Executive Phakamani Hadebe said the power utility continues to engage its key stakeholders as part of efforts to address governance and liquidity matters.
“Eskom notes the decision by S&P to downgrade the credit rating as largely based on the strain on our liquidity levels. We have been and continue to be in extensive engagements with key stakeholders to resolve Eskom’s current governance related and liquidity issues.
“Further, we have demonstrated visible actions that have been implemented to turn this company around. We are comfortable that government has provided Eskom with tangible support to ensure that Eskom’s governance related and liquidity challenges are expediently resolved,” said Hadebe.
Meanwhile, acting Chief Financial Officer Calib Cassim said the downgrade comes at an unfortunate time.
“The timing of the downgrade is unfortunate as we believe that we are starting to see slight improvements in market sentiments. We will continue to engage with the rating agencies and various key stakeholders on the implementation and progress of the turnaround strategy with the ultimate goal of providing enough comfort to investors that we are on a path to stabilising Eskom’s operational and financial profile,” he said.
S&P’s downgrade follows a Fitch Ratings downgrade of the utility in January.
Fitch downgraded the power utility’s long-term local currency Issuer Default Rating (IDR) and unguaranteed local currency senior unsecured ratings to BB- from of BB+ and maintained the ratings on rating watch negative (RWN).
In their statement, Fitch cited weakening liquidity of Eskom and the company’s uncertain capacity to fulfil its short-term financial commitments as the underpinning rationale for their decision. - SAnews.gov.za
