Eskom says will have to contend with higher cost of debt following ratings downgrade
State-owned Eskom CFO Anoj Singh says the entity’s funding requirements for the 2017/18 financial year will not be affected by Standard and Poor’s (S&P’s) decision to downgrade its corporate credit rating, as 72% of the current fiscal year’s funding of R72-billion will be secured by end-April.
“We are confident that we will successfully execute Eskom’s funding plan over the next five years backed by the availability of the government guarantees; the only challenge that Eskom will have to contend with will be the higher cost of debt.”
S&P’s earlier this month lowered its long-term corporate credit rating on Eskom to ‘B+’ from ‘BB-’, following its ratings action to downgrade South Africa’s long-term foreign currency rating credit rating to ‘BB+’.
Moody’s Investor Services also announced its decision to place Eskom’s Ba1 senior unsecured medium term note rating on review for downgrade; the rating agency has simultaneously placed Eskom’s global scale corporate family rating of Ba1 and its national scale rating of A2.za on review for downgrade.
Moody’s review decision on Eskom also follows the rating agency’s decision to place the sovereign’s Baa2 bond rating on review for downgrade, also on April 3.
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