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Fitch revises Eskom outlook to stable

15th January 2013

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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Credit ratings agency Fitch revised its outlook on Eskom from negative to stable and downgraded Eskom’s local currency rating by one notch, following its downgrade of South Africa’s sovereign rating on January 10.

The agency affirmed that Eskom’s ratings remained linked to the sovereign ratings of South Africa, in line with the agency's 'Parent and Subsidiary Rating Linkage' criteria and the agency's assessment of the critical role of Eskom in the South African economy.  

The agency downgraded Eskom's long-term local currency Issuer Default Rating and its senior unsecured local currency rating from A to BBB+.

Fitch also stated that future developments that could lead to positive ratings actions for Eskom included an upgrade of South Africa’s sovereign rating, provided the strength of Eskom’s links with the sovereign did not weaken.  

Eskom’s recent outlook upgrade by Fitch follows recent downgrades by fellow ratings agencies Standard & Poor’s and Moody’s.

“We have taken note of the ratings agencies’ analysis of the challenges facing Eskom. Their comments highlight the electricity industry’s need for regulatory and policy certainty, as well as the need for Eskom to be financially sustainable,” said Eskom CE Brian Dames.

Edited by Chanel de Bruyn
Creamer Media Online Managing Editor

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