- The ratings action is an affirmation of extensive measures that have been implemented by the companyโs leadership in transitioning Eskom from business as usual towards sustainability – Eskomโs Group Chief Executive, Phakamani Hadebe
- The announcement reflects the improvements in investor sentiment that has allowed Eskom access to the various sources of funding that bolstered our liquidity levels.
- Eskom has a clearer sense of direction in terms tariff path owing to Nersaโs announcements on the RCA applications โ at a requested 15% tariff hike per year for the next four years.
Fitch Ratings has announced its decision to affirm Eskom Long-Term Local Currency Issuer Default Rating (IDR) and unguaranteed local currency senior unsecured ratings of ‘BB-‘. Fitch has simultaneously maintained the National Long-Term Rating at ‘A(zaf)’ and the National Short-Term Rating at โF1(zaf)’.
The rating agency has also affirmed the government-guaranteed local currency senior unsecured debt ratings at ‘BB+’, in line with the rating of South Africa (BB+/Stable Outlook). The credit rating agency has also resolved to remove the Rating Watch Negative (RWN) instituted by Fitch in January 2018. Outlook on Eskom remains negative.
The decision to affirm the rating and remove the RWN on Eskom is a positive indication of the ratings agencyโs view that Eskom has made significant progress towards improving the companyโs liquidity health and resolving corporate governance challenges that plagued the company.
At end September 2018, Eskom had successfully signed and secured approximately 72% of the FY18/19 R72 billion funding requirement from various sources of funding including both local and international financial markets.
Eskom is fairly confident that it will successfully execute the remaining funding requirement through various sources including committed Development Finance Institutions (DFIs), local debt capital markets, Export Credit Agencies (ECAs) and other innovative funding structures.
Eskomโs Group Chief Executive, Phakamani Hadebe said: โthe ratings action is an affirmation of extensive measures that have been implemented by the companyโs leadership in transitioning Eskom from business as usual towards sustainabilityโ.
Hadebe adds โThis reflects the start in our journey towards restoring financial health, however the road ahead will be tough. Eskom remains a vital contributor to ensuring that South Africaโs economic growth targets are achieved and ensuring security of supply remains one of our key prioritiesโ.
โThis reflects the improvements in investor sentiment that has allowed Eskom access to the various sources of funding that bolstered our liquidity levels. We also have a sense of direction in terms of our tariff path owing to Nersaโs announcements on the RCA applications. Eskomโs operational and financial sustainability are very important focus areas and this ratings action gives us confidence that we are on the right pathโ, said Calib Cassim, Acting Chief Financial Officer at Eskom.
Author: GBA News Desk/Eskom Media