Picture: REUTERS/BRENDAN McDERMID
Picture: REUTERS/BRENDAN McDERMID

Credit ratings agency S&P said on Thursday that it will review its rating of Eskom’s debt, following the announcement in Wednesday’s budget that government is to shore up the ailing company with substantial support.

S&P has Eskom debt on a CCC+ rating, which is deep in junk territory, with a negative outlook. S&P said it will “await further clarity on the support package and tariffs” before making a rating action.

The agency has previously noted that the government’s support for Eskom is insufficient. On Wednesday, the government said Eskom would receive R23bn a year for the next three years to help it service its debt. This support will be extended beyond the budget period for the next 10 years.

The agency also noted that financial support for Eskom could be positive for the country in that “Eskom may temper upward pressure on electricity tariffs, which place an additional burden on businesses and households in SA.”

patonc@businesslive.co.za