- On the 23rd of May, Fitch Ratings announced its decision to affirm Eskom Holdings SOC Ltd.’s Long-Term Local-Currency Issuer Default Rating (IDR) at ‘B’, with a stable outlook.
In addition, Fitch Ratings revised Eskom’s Standalone Credit Profile (SCP) to ‘ccc+’ from ‘ccc-‘. Fitch Ratings stated the revision of Eskom’s SCP is a reflection of the improvement in the operational performance of the Group and the material increase in earnings before interest, taxes, depreciation, and amortization (EBITDA) that the ratings agency has evaluated as likely in Eskom’s Financial Years (FY) 2025 to FY 2029.
According to Professor Anton Eberhard, South Africa’s national power utility has not improved its performance since last year. “28% of its power plant is broken, last week totaling 14 095 MW – above its self-imposed limit of 13 000MW beyond which loadshedding becomes likely. Compared to last year, Eskom is burning almost twice the amount of diesel in its emergency OCGT turbines,” said Eberhard in a X feed after evaluation Eskom’s latest state of the system update. Eberhard is an energy policy & investment specialist & advisor – Professor Emeritus, Power Futures Lab, GSB, University of Cape Town.
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“The affirmation and positive revision on our credit rating profile by Fitch reinforces our determination to continue our efforts to turnaround Eskom’s financial and operational performance. Our aim remains to ultimately reduce Eskom’s reliance on government support by driving the company towards financial sustainability,” said Dan Marokane, Eskom’s Group Chief Executive.
Fitch Ratings has also affirmed Eskom’s senior unsecured debt at ‘B’ with a Recovery Rating of ‘RR4’ and its senior unsecured guaranteed debt at ‘BB-‘.
Fitch Ratings attributed the affirmation of Eskom’s IDR to strong links between Eskom and South Africa (BB-/Stable) under the rating agency’s latest Government-Related Entities (GRE) rating criteria.
Author: Bryan Groenendaal
