S&P puts Eskom bonds on the cusp of ‘deep junk’ territory
Eskom’s bonds were placed on the bottom rung of "noninvestment grade" by S&P Global Ratings on Thursday night. Besides cutting Eskom’s rating to BB- from BB, the ratings agency also gave the power utility a negative outlook — meaning Eskom’s credit rating now stands precariously on the edge of falling into the deep junk territory of the "highly speculative" single B range. Two key reasons S&P gave for its decision were the likelihood that Eskom would be granted tariff increases of 2.2% in its financial year to end-March 2018, rather than its requested 9.5%, following legal action from industrial customers; and that the government had not yet said whether it would renew its R350bn debt guarantee when it expires in March. S&P originally cut Eskom to BB from BB+ with negative outlook on November 25. S&P said Friday's rating reflected the negative outlook it subsequently gave SA's sovereign rating. Moody’s, on the other hand, maintained Eskom at Ba1 (equivalent to BB+) on December 5. "W...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.