Eskom: S&P’s decision on debt assessment a step in the right direction

Eskom said that the move by S&P Global Ratings to place the embattled power utility’s debt assessment on positive watch was a step in the right direction.

This comes after Treasury signed off on a major debt relief arrangement for Eskom during last month’s budget speech.

The bailout, worth over R250 billion over three years, could see S&P upgrade Eskom’s rating.

Eskom’s credit rating by S&P sits quite far down on the ranks, which means that the power utility is a substantial risk for investors.

The power utility said that the decision by S&P was an indication to the market that the agency could still improve Eskom’s rating by one or two notches.

Eskom added that this was likely based on their expectation that the state-owned company’s financial position would be improved by Treasury’s debt relief.

Acting Eskom CEO Calib Cassim said that he also hoped that the move would ease some fears that the company’s lenders and creditors had about its financial stability.

In addition to the debt relief of R254 billion made in the 2023 budget review, Treasury also committed to taking over up to R70 billion in Eskom’s debt for the 2026 financial year.

The bailout will depend on strict conditions.

-EWN

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