Moody’s downgrades Eskom
The rating agency cut the embattled utility’s credit rating to the second rung of junk status
Moody’s lowered Eskom’s credit rating to the second rung of junk status on Tuesday night. Moody’s reduced Eskom’s rating from Ba1 to Ba2, which equates to BB in the nomenclature of S&P Global Ratings and Fitch Ratings. Moody’s follows S&P’s move on April 7 when it cut the power utility’s credit rating to B+, four rungs into junk and into the "highly speculative" band of single Bs from the "noninvestment grade" of double Bs. "Given Eskom’s very weak standalone credit quality, its ratings rely on the support that Moody’s considers would be provided by the government if necessary," Moody’s said in its statement. If not for government’s R350bn guarantee framework agreement with Eskom, Moody’s said it would rate Eskom as b3, which equates to B- in the other rating agencies’ nomenclature. "We note the Moody’s rating action as primarily driven by the downgrade of the sovereign credit rating. Eskom has secured 53% of this fiscal year’s funding requirement and we remain resolute that we will...
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