Moody's upgrades Eskom

Johannesburg - Moody's Investors Service has changed the outlook on the Baa2 senior unsecured bonds of Eskom Holdings to stable from negative.

The rating action reflects a number of measures that have been taken over the last few months in order to strengthen the company and allow it to continue with essential investments in South Africa's electricity infrastructure, the ratings agency said.

"The timing of the review by Moody's is fitting given the progress made towards resolving the concerns raised by all rating agencies," said Eskom finance director Paul O'Flaherty.

"Firstly, we have posted improved financial results for the six months ended September 2010 and secondly the SA Government has demonstrated its strong financial support by approving an increase in its guarantee limit from R176bn to R350bn and proposing an equity injection of R20bn, which is still subject to government's internal approvals", said O'Flaherty.

Eskom said it views this rating amendment favourably and views it as a further enabler to its commitment to delivering the much needed capacity whilst maintaining the financial sustainability of the company.

Moody's said the rating action reflects a number of measures that have been taken over the last few months in order to strengthen the company and allow it to continue with essential investments in South Africa's electricity infrastructure, the ratings agency said.