Based on the Moody’s credit rating methodology for government-related issuers (GRIs); Eskom’s credit ratings downgrade follows the rating agency’s decision to downgrade the Sovereign credit rating by one-notch (to Baa3 with a negative outlook) as announced by Moody’s on 9 June 2017.
Therefore, Moody’s has downgraded the corporate family rating (CFR) of Eskom Holdings SOC Limited (Eskom) to Ba2 from Ba1. The rating agency also revised the senior zero coupon Eurobonds (Section 7 debt under the Eskom Conversion Act, 2001) rating to Ba2 from Ba1 in line with the CFR. Simultaneously, Moody’s has downgraded to Ba3/(P) Ba3 respectively the unsecured global medium term notes (GMTN) and GMTN programme of Eskom. The outlook on all ratings is negative.
“We note the 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. 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”, said Anoj Singh, Eskom’s Chief Financial Officer.
BUSINESS REPORT ONLINE