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S&P keeps Eskom's credit rating at junk status

Nov 29 2018 20:22
Lameez Omarjee

Ratings agency Standard & Poor's has kept Eskom's credit rating below sub-investment grade.

The power utility on Thursday evening issued a statement indicating that the ratings agency affirmed its foreign and local currency long-term ratings at CCC+, with a negative outlook.

A CCC rating means that the power utility is vulnerable and dependent on favourable business, financial and economic conditions to meet its financial commitments, according to a S&P's ratings definitions.

The ratings agency also affirmed Eskom's long and short-term national scale ratings, both at zaB.

S&P's report comes a day after Eskom released its half-year results, which reflected a 89% decline in net profit. At a briefing on the results CEO Phakamani Hadebe said that although liquidity had improved, the state-owned company remained a "debt-driven entity" with severe financial challenges.

Newly appointed Chief Financial Officer Calib Cassim said the power utility is "encouraged" by S&P's decision to affirm ratings.

"We view this action as a positive demonstration of the improving sentiments towards Eskom.

"We remain cognisant of the operational and financial challenges that we need to resolve; we are resolute in our endeavours to steer this company towards desirable operational and financial sustainability," he said.

Hadebe said that the group is finalising its strategy blueprint and corporate plan. He explained that if the company is in a better position it would support the company's growth and development plans through consistent security of supply.

Earlier Eskom said there would be 10 hour long load shedding due to one of its plants being out for planned maintenance and increased plant outages. 

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s&p  |  eskom  |  debt  |  ratings agency
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