Relief over Eskom rating

Johannesburg - State power utility Eskom said on Thursday it was satisfied with its latest Standard & Poor's rating.

Standard and Poor's (S&P) has affirmed Eskom's Local Currency rating at A- and its Foreign Currency rating at BBB+. This brings to an end the uncertainty created by the CreditWatch status. Both hold a negative outlook which is reflective of that of its shareholder, the South African government.

Mpho Makwana, acting chairperson of Eskom, said: "We are satisfied that the rating is reflective of the critical role of Eskom to the South African economy. The resolution of the CreditWatch status also recognises the progress made by Eskom in conjunction with its shareholder to stabilise Eskom's credit profile particularly in the context of the current build programme.

"We are optimistic that in its determination the National Energy Regulator of South Africa (Nersa) will take these concerns raised in the S&P review into consideration."

Last year the government provided Eskom with loan guarantee facility of R176bn. The government guarantee mechanism was designed to protect guaranteed lenders while not prejudicing un-guaranteed lenders and has been confirmed as satisfying S&P's criteria for timely, direct, and unconditional payment. "Thus, this rating indicates the credit worthiness of Eskom's un-guaranteed debt whereas the guaranteed debt enjoys the Sovereign rating."

- I-Net Bridge