Moody’s Investor Services (Moody’s) has downgraded to ‘B1 from Ba3’ the long-term corporate family rating (CFR) of Eskom; the zero coupon eurobonds rating has similarly been revised to ‘B1’ from ‘Ba3’ in line with the CFR and the global medium term note (GMTN) programme and the senior unsecured GMTNs of Eskom have been downgraded to ‘(P)B2/B2 from (P)B1/B1’. All Moody’s ratings remain under review for further downgrades.
While the rating agency views the recent interventions, including the appointment of the Board by Deputy President Ramaphosa as favourable actions in bolstering the credit quality of Eskom; Moody’s cited Eskom’s deteriorating liquidity and the ability of Government to provide direct equity support to Eskom.
“We note the decision by Moody’s to downgrade the company’s rating; however we remain resolute in our endeavours to progressively turn this company around. The liquidity concerns raised by Moody’s are starting to dissipate as we are already seeing investors and lenders revive their engagements and commitment to Eskom. We see this action by Moody’s as a low point in the credit profile of Eskom and we are confident that we are on a path to recovery; supported by the new Board, the governance and leadership at Eskom is being stabilised to bolster the turnaround of the company.”
“We remain cautiously enthusiastic that we are geared towards improving the company’s liquidity position and financial profile. We are acutely aware of the challenges that Eskom is confronted with; however, we are confident that we are on the verge of restoring a positive market sentiment that will assist with the execution of our funding plan,” concludes Calib Cassim, Eskom Acting Chief Financial Officer.