Fin24

Moody's cuts Eskom, Telkom ratings

2012-10-02 07:38

Johannesburg - Credit agency Moody's on Monday cut its rating for power utility Eskom, fixed-line operator Telkom [JSE:TKG] and 12 municipalities, following a similar downgrade of Africa's top economy last week.

It also lowered its outlook on miner Gold Fields [JSE:GFI] to "stable" from "positive", citing concern about the impact of labour unrest on South Africa's mining industry.

The agency said in a statement it cut Eskom's senior unsecured bond rating by one notch, to Baa3 from Baa2, a move that could drive up borrowing costs for the utility as it looks to fund infrastructure spending.

The state-owned utility is expected to tap the bond market for some of a planned R300bn in funding.

Moody's made a similar cut to Telkom's rating, which was also lowered to Baa3, while 12 local governments had their long-term ratings cut.

The agency on Thursday cut the government bond rating of Africa's top economy by one notch, citing worries about the negative investment climate - from creaking infrastructure to concerns about future political stability.

Investor sentiment has been soured by a series of wildcat strikes in the mining industry in recent weeks, which have hamstrung production in the world's top platinum producer and No.4 gold producer.

Critics have also charged that the strikes have exposed President Jacob Zuma's ANC as ineffectual and out of touch with millions of poor South Africans.


*Follow Fin24 on TwitterFacebookGoogle+ and Pinterest.  

 

Comments
  • larry.piggott1 - 2012-10-02 07:49

    Its incredible that Cash cows such as these, that charge whatever the feel that they can get away with, are downgraded. It shows that a complete bunch of morons are running the joints.

  • tim.brink.1238 - 2012-10-02 07:51

    Sinking ships

  • jacob.zooma.9 - 2012-10-02 07:52

    We willll just increase the tax on petrol and VAT, We don't need Moddy, We have our own cows on our farm.

  • wwrer.ww - 2012-10-02 07:58

    I don't agree with Moody's assessment of the situation. Economic growth rates in European and most other countries varies between -0.7% and 0.8%. Goto tradingeconomics and check more than 70 of the largest economies in the world are growing at between -0.7% and 0.8%. South Africa is at least showing 3.2% and it has an infrastructure plan.

      Ze Don - 2012-10-02 08:13

      We also don't have ANY political leadership in government. Not to mention a ill disciplined labour force, rampant corruption and out of control crime! So in short the country isn't stable! Where would you invest your money? Where it would be relatively safe or where it's almost guaranteed to be stolen?

      alan.jerrold - 2012-10-02 09:27

      We do have an infrastructure plan (done by Manuel) and a pretty good one it is. Trouble is, it's not being implemented at all by the ANC fatcats, who are far more intent on feathering their own nests.

      ro.jhb.1 - 2012-10-02 10:26

      Sadly growth doesn’t guarantee repayment of debt which is what Moody’s etc. determines. Sadly SA has to burn before it can grow and the ANC, with their arrogant attitude that they know best, needs to learn some hard lessons which sadly the starving masses will bear the brunt of, before SA starts to prosper.

  • xmkungeki - 2012-10-02 08:05

    These agencies are starting to irritate me now..I just pray that ANC Branches elect \right\ leaders in mangaung!!

      Ze Don - 2012-10-02 08:20

      Why are they irritating you? Because they're showing a true reflection of what's happening in our country? Or perhaps because they aren't buying into the ANC spin?

  • Tshepo Gwamanda - 2012-10-02 08:13

    Moody has also downgraded the ANC's ratings from a D minus to a Gaa3!! :-)

  • smatiwane - 2012-10-02 08:45

    Moddy's has lost all credibility since the 2008 financial crisis. Lehman Brother was rated AA just days before they filed for bankruptcy, including Merrill lynch, AIG, etc. Freddie Mac was even worse as they were rated AAA just days before they were bailout. When the rating agencies were called before congress...they merely said that when they are rating they are simply giving their "opinion".

  • lerato.kay.3 - 2012-10-02 08:57

    Moody’s ratings must be received with caution; people must learn not to swallow everything that comes from this biased institution. Most criticism of  Moody and the big 3 in general  centers on the \issuer-pays\ model, the system employed by S

  • lerato.kay.3 - 2012-10-02 09:14

    Moody’s ratings must be received with caution; people must learn not to swallow everything that comes from this biased institution. Most criticism of  Moody and the big 3 in general  centers on the \issuer-pays\ model, the system employed by S

  • nhla.prv - 2012-10-02 18:51

    These guys are moody !

  • pages:
  • 1