S&P Global Ratings upgrades Eskom’s credit ratings and revises outlook

Sunday, 26 November 2023: On 24 November 2023, S&P Global Ratings (“S&P Global”) announced their decision to upgrade Eskom’s long-term issuer credit rating to ‘B’ from ‘CCC+’ with a stable outlook on the Group’s senior secured and senior unsecured debt. In addition, S&P Global also upgraded Eskom’s South Africa national scale rating to ‘zaBBB/zaA-2’ from ‘zaB/zaB’.

In their rationale, the credit rating agency stated that the upgrade is due to their expectation that the South African government’s R254 billion financial support package, as part of the Eskom Debt Relief Act signed into law on 7 July 2023, will cover Eskom’s debt servicing and repayment obligations over the current and coming two financial years resulting in an improvement of the company’s credit quality.

The stable outlook reflects S&P Global’s view that Eskom’s creditworthiness will continue to benefit from explicit and timely support from the South African Government, facilitating a strengthening of Eskom’s liquidity position and less risk of default as the debt relief agreement is implemented as stipulated. 

“Eskom welcomes the decision to upgrade the company’s credit rating by S&P Global. We continue to work with key stakeholders, particularly shareholder ministries as we implement our turnaround plan with a focus on key strategic objectives which include operations and financial recovery; people, culture and ethics, and legal separation of the business,” said Eskom’s Acting Group Chief Executive, Calib Cassim.

The debt-relief package extended to Eskom by National Treasury is being used to cover debt service requirements and was enacted on condition that Eskom does not incur any further indebtedness over the next three years without explicit approval of the Minister of Finance.

ENDS