Moody’s downgrades embattled Eskom
Global rating agency Moody’s has downgraded Eskom’s long-term corporate family rating and zero coupon Eurobonds family rating to B1 from Ba3 and warned that the rating remains under review for further downgrades.
The rating agency cited Eskom’s deteriorating liquidity and the ability of the government to provide direct equity support to the embattled electricity parastatal as the reason for the downgrade.
This was notwithstanding that it viewed the recent interventions‚ including the appointment of a new board by Deputy President Ramaphosa‚ as favourable in bolstering the credit quality of Eskom.
Commenting on the downgrade‚ Eskom said: “We note the decision by Moody’s to downgrade the company’s rating; however we remain resolute in our endeavours to progressively turn this company around. The liquidity concerns raised by Moody’s are starting to dissipate as we are already seeing investors and lenders revive their engagements and commitment to Eskom. We see this action by Moody’s as a low point in the credit profile of Eskom and we are confident that we are on a path to recovery; supported by the new Board‚ the governance and leadership at Eskom is being stabilised to bolster the turnaround of the company.”
Eskom’s acting chief financial officer‚ Calib Cassim‚ said: “We remain cautiously enthusiastic that we are geared towards improving the company’s liquidity position and financial profile. We are acutely aware of the challenges that Eskom is confronted with; however‚ we are confident that we are on the verge of restoring a positive market sentiment that will assist with the execution of our funding plan.”
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