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S&P downgrade worries Eskom

Oct 17 2012 14:56 Sapa


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Johannesburg - Eskom is concerned about its one notch downgrading by rating agency Standard & Poor's, the power utility said on Wednesday.

"Although Eskom's credit rating remains investment grade, with the support of government, the recent downgrades by Moody's and Standard & Poor's are a concern.

"An investment grade credit rating is critical to access the cost-effective funding needed to ensure that Eskom and the industry can invest in the electricity infrastructure which South Africa needs," Eskom said.

Credit rating agency Standard & Poor's announced it had downgraded Eskom's credit rating by one notch, as a consequence of its recent decision to downgrade the South African sovereign rating.

Last week, Standard & Poor's lowered the long-term foreign and local currency ratings on South Africa to BBB and A- respectively.

In accordance with its criteria for government-related entities, Standard & Poor's had therefore lowered Eskom's long-term foreign and local currency credit ratings to BBB from BBB+.

It also retained its negative outlook on Eskom, as was the case with the state, due to the unrest in the country's mining sector.

Standard's & Poor's rating followed on the tracks of Moody's, which downgraded the government bond rating by one notch to Baa1 from A3.

National Treasury was also concerned about the country's downgrading and Finance Minister Pravin Gordhan was expected to shed some light on what government would do when he tables his medium-term budget policy statement next week.

 
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