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Ratings agency Fitch Ratings has affirmed Eskom’s long-term local currency issuer default rating and unguaranteed local currency senior unsecured ratings of ‘BB-’ .
Fitch also maintained the national long-term rating at ‘A(zaf)’ and the national short-term rating at ‘F1(zaf)’.
Moreover, the agency affirmed the government-guaranteed local currency senior unsecured debt ratings at ‘BB+’, which is in line with the rating of South Africa, at a ‘BB+’ outlook.
The agency further resolved to remove the rating watch negative (RWN) instituted by it in January 2018.
The outlook on Eskom remains negative.
“The decision to affirm the rating and remove the RWN on Eskom is a positive indication of the ratings agency’s view that Eskom has made significant progress towards improving the company’s liquidity health and resolving corporate governance challenges that plagued the company,” stated Eskom.
At end-September, Eskom had successfully signed and secured about 72% of the 2018/19 financial year’s 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, local debt capital markets, export credit agencies and other funding structures.
Eskom group CE Phakamani Hadebe said the ratings action is an affirmation of extensive measures that have been implemented by the company’s leadership in transitioning Eskom from business as usual towards sustainability.
“[The rating] 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 Africa’s economic growth targets are achieved and ensuring security of supply remains one of our key priorities.”