Standard & Poor’s Ratings Service has lowered its long-term local and foreign currency corporate credit ratings on South Africa-based power utility ESKOM Holdings SOC Ltd. (ESKOM) to 'BBB' from 'BBB+'. The outlook remains negative.
At the same time‚ the rating agency has affirmed its long- and short-term South Africa national scale ratings on ESKOM at 'zaAA/zaA-1'.
The downgrade follows S&P’s lowering of the long-term foreign and local currency ratings on the Republic of South Africa to 'BBB' and 'A-'‚ respectively‚ with the outlook remaining negative.
“In accordance with our criteria for government-related entities‚ we are lowering to 'BBB' from 'BBB+' our long-term foreign and local currency corporate credit ratings on South African power utility ESKOM Holdings SOC Ltd. (ESKOM).
“The 'b' stand-alone credit profile on ESKOM remains unchanged and reflects ESKOM's ‘fair’ business risk profile and ‘highly leveraged’ financial risk profile.
“The negative outlook on ESKOM reflects that on South Africa‚ and our view that a downgrade of the sovereign would likely result in a downgrade of ESKOM‚” S&P said in a statement.
Commenting on the downgrade‚ Eskom said that although its credit rating remained investment grade‚ with the support of government‚ the recent downgrades by Moody’s and Standard & Poor’s were a concern.
“An investment grade credit rating is critical to access the cost-effective funding needed to ensure that Eskom and the industry can invest in the electricity infrastructure which South Africa needs‚” the power utility said. - I-Net Bridge