Johannesburg - Moody’s Investor Services on Tuesday affirmed
Eskom’s medium-term notes at junk, and assigned it a national scale rating of
upper medium grade.
The big 3 rating agency did, however, have a negative
outlook on both ratings.
In a statement, Eskom noted that Moody’s cites Eskom’s
continued successful access to funding with the support of the R350 billion
Guarantee Framework Agreement (GFA) provided by the South African government;
and its stabilised operational performance as the rationale for the
affirmation. “Due to improved operational performance, Eskom has not
implemented load-shedding since August 2015.”
In September 2016, Moody’s placed Eskom on review for
downgrade; that however has been revised to a negative outlook, indicating the
potential for the company’s outlook to be revised to stable in the event that
government approves Eskom’s request to extend the use period of the GFA
currently scheduled to expire on March 31.
It says that process is underway.
“The outlook could also be revised in the event that
Moody’s changes the government’s outlook from negative to stable.”
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So far, Eskom has secured 86 percent of the funding
requirement for financial year 2016/17 and 28 percent of the funding
requirement for 2017/18.
“The company has also achieved significant improvements
on their financial rations and expects further improvements in the next five
years.”
CFO Anoj Singh says “we are encouraged by Moody’s
decision to affirm Eskom’s credit ratings; we view this action as evidence that
we have made major strides in ensuring a secure electricity supply and in
improving the company’s financial profile; thereby enabling us to continue with
timeously executing the required funding for the completion of the current build
programme”.
BUSINESS REPORT