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Eskom 'notes' Moody's downgrade

Oct 04 2012 07:43

Johannesburg - Electricity utility Eskom has acknowledged the downgrade in its credit rating by Moody's Investors' Service, and said it reflected the problems facing the company.

Moody's decreased Eskom's rating by a notch on Monday, to Baa3 from Baa2. However, Standard & Poors reaffirmed Eskom's rating of BBB+.

"We have taken note of the rating agencies' analysis of the challenges facing Eskom," CEO Brian Dames said in a statement on Wednesday.

"Their comments highlight the electricity industry's need for regulatory and policy certainty, as well as the need for Eskom to be financially sustainable," he said.

The ratings indicated that Eskom had adequate capacity for its commitments, but could be weakened if economic conditions worsened or its circumstances changed.

Moody's said its rating decrease was linked to the revision of the South African Sovereign bond rating on Thursday, as the government's credit profile directly affected the rating of Eskom.

The credit ratings influence the cost and availability of its debt, Eskom said.

It was working on a R340bn infrastructure building programme, for which it already had R180bn of debt on its balance sheet, from local and international financial markets. This was expected to almost double in the next six years.

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