Johannesburg - International ratings agency, Fitch Ratings, on Wednesday, announced its decision to maintain Eskom's Long-Term Local Currency Issuer Default Rating (IDR) and unguaranteed local currency senior unsecured ratings of 'BB-'.
Fitch maintained the National Long-Term Rating at 'A(zaf)' and the National Short-Term Rating at ‘F1(zaf)'. The government-guaranteed local currency senior unsecured debt ratings was affirmed at 'BB+', in line with the rating of South Africa (BB+/Stable Outlook).
Fitch Ratings kept Eskom’s credit ratings -- except the government guaranteed debt -- remain on Rating Watch Negative (RWN) as instituted in January.
Eskom said the ratings decisions by Fitch was positive.
"The rating agency is cognisant of the positive measures that have been implemented by the new board and management to turn the company around in their short tenure at Eskom. The rating agency does acknowledge that the company has made positive strides in addressing its liquidity challenges; however, Fitch Ratings maintains that Eskom’s liquidity challenges remain the main rationale for their RWN position on the company’s rating," the power utility said.
"Eskom successfully raised R57 billion from the financial markets for the year ending 31 March 2018; R43 billion of which was raised between January and March 2018. Eskom is confident that it will successfully execute its R72 billion FY18/19 funding requirement through various sources including committed Development Finance Institutions (DFIs), local and international debt capital markets, Export Credit Agencies (ECAs) and other innovative funding structures."
Eskom said that by March 31, it had secured 16 percent (R11 billion) of the funding requirement.
The power utility said that it had also submitted the R66.6 billion Regulatory Clearing Account (RCA) applications for 2015, 2016 and 2017; the National Energy Regulator (Nersa) public hearings on these applications are currently underway with the announcement on the Regulator’s decision expected by 21 June 2018.
Eskom’s Interim Group Chief Executive, Phakamani Hadebe said they were encouraged by Fitch Ratings’ decision to affirm Eskom’s credit ratings and acknowledged the continuing Ratings Watch Negative status.
"To ensure Eskom’s future sustainability the Eskom Board has embarked on a turnaround business strategy with a core focus on financial viability, continued strong operational performance and the complete resolution of governance related challenges," Hadebe said.
"We are reassured by the rating agency’s acknowledgement of the progress made to date and we are confident that the positive trajectory will continue to a point where the company attains acceptable operational and financial sustainability.”
Meanwhile, Acting Chief Financial Officer Calib Cassim said they remain cognisant of the multiple challenges faced by Eskom.
“While we are cognisant of the multiple challenges faced by the company; we remain confident that we will successfully execute the FY18/19 funding requirement," Cassim said.
"The various engagements with key financial markets stakeholders have confirmed a renewed local and international investor appetite in Eskom. This has also been demonstrated by the tangible support received from these stakeholders and their willingness to constructively continue engaging Eskom.”
African News Agency/ANA