S&P takes dim view of Eskom’s state debt
Meanwhile, Eskom has restructured its executive committee, with Abram Masango seconded to group CEO
Ratings agency Standard & Poor’s (S&P) has affirmed its credit rating of Eskom at BB-, citing the government’s extension of the utility’s R350bn debt guarantee by six years. The agency retained Eskom’s negative outlook. This comes days after the electricity producer said it had ramped the first unit of the Kusile power station to full production of 800MW, putting it on course for commercial production. This would expand Eskom’s installed capacity. The BB-rating is the first notch in the agency’s speculative grading, or junk status, meaning the utility is “less vulnerable in the near term but faces major ongoing uncertainties to adverse business, financial and economic conditions”, says S&P. Junk status means a company’s borrowing ability is reduced, with its debt becoming riskier and more expensive. Eskom relies on debt to fund its capital expenditure programme. Even with the government’s support, its credit rating has deteriorated over the past seven years. The company’s lack of ad...
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