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ALERT: Moody’s downgrades Eskom, Sasol, MTN, ACSA… and more

Jun 14 2017 06:01
Matthew le Cordeur

Cape Town – Moody’s downgraded the credit ratings of Eskom, Sasol, MTN, ACSA and has taken action on eight other South African corporates.

The downgrade follows their decision to downgrade the country’s long-term foreign and local currency debt ratings by one notch from Baa2 to Baa3 with a negative outlook on Friday.

On Monday, it downgraded the credit ratings of South Africa’s top five banks, three development finance institutions, certain City Power and Sanral credit ratings, and 10 regional and local governments.

On Tuesday evening, the downgrade axe continued to fall.

Commenting on Eskom’s downgrade, Eskom’s chief financial officer Anoj Singh said Eskom noted Moody’s rating action as primarily driven by the downgrade of the Sovereign credit rating.

“Eskom has secured 53% of this fiscal year’s funding requirement and we remain resolute that we will fully execute the required funding for the year, albeit under challenging market conditions," he said in a statement.

“Our liquidity levels remain healthy and Eskom’s financial profile continues to improve and stabilise.

“Backed by the availability of the government guarantees and the stable financial profile; we do not foresee significant impediments in the execution of the remainder of the FY17/18 funding requirement," he said.

In a series of statements on Tuesday evening after the markets closed, Moody’s announced the following:

  • It downgraded Eskom’s long-term corporate family rating (CFR) to Ba2 from Ba1 and the zero coupon eurobonds to Ba2 from Ba1 in line with the CFR, it said in a statement on Tuesday. The outlook is negative.
  • It downgraded the Airports Company South Africa (ACSA) to Baa3 from Baa2; the rating outlook is negative.
  • It downgraded MTN to Ba1 from Baa3 and the outlook is changed to stable from negative.
  • It downgraded the global scale long-term issuer ratings assigned to Sasol to Baa3 from Baa2. The outlook on the ratings is negative.
  • It downgraded to Baa3 from Baa2 the long-term issuer ratings and changed the outlooks to negative from ratings under review of the Bidvest Group and Growthpoint Properties.
  • It affirmed the Baa3 long-term issuer ratings and changed the outlooks to negative from stable of Barloworld, Fortress Income Fund, Hyprop Investments and Telkom.
  • The respective national scale ratings assigned to the above corporates as well as Consolidated Infrastructure Group and Kagiso Tiso Holdings were affected by the revised national scale mapping table for South Africa.

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