Thursday, 29 March
2018: Moody’s
Investor Services (Moody’s) has downgraded to ‘B2 from B1’ Eskom’s long-term
corporate family rating (CFR). The zero coupon eurobonds rating has similarly
been revised to ‘B2’ from ‘B1’ in line with the CFR and the global medium term
note (GMTN) programme and the senior unsecured GMTNs of Eskom were also
downgraded to ‘(P)B3/B3 from (P)B2/B2’. The outlook is negative.
While the downgrade is
disappointing, it is worth noting that in its decision, Moody’s acknowledges
the positive strides that the new Board and the new Interim Group Chief
Executive have made in the two-month period that they have led the
organisation.
The three issues of
concern raised by the rating agency centre around the inadequate tariff
increases in the face of flat demand, no tangible government support and a lack
of a resilient business strategy that will ensure Eskom’s sustainability.
The new Eskom Board is
investing a considerable amount of time in formulating a comprehensive
long-term strategy and plan that will place Eskom’s business on a firmer
footing. We are confident that the execution of the turnaround strategy will be
accompanied by positive gains.
Eskom’s Interim Group
Chief Executive, Phakamani Hadebe said: “While we are disappointed with Moody’s
decision at this stage, the future looks promising. We have addressed the
liquidity issue and other key challenges. The new Board and Eskom leadership
are swiftly moving into the second intervention stage by formulating an
integrated strategy that will yield favourable results. The positive sentiments
expressed by Moody’s encourage us to work even harder to ensure the execution
of this strategy. I am confident that we will stabilise the credit profile of
Eskom and improve its credit rating.”
ENDS