S&P downgrades Eskom's rating

Eskom headquarters, MegaWatt Park, Johannesburg

File: It follows National Treasury report which found that Eskom management prejudiced Glencore by refusing to sign the negotiated coal supply agreement.

JOHANNESBURG – S&P Global said it was cutting its rating on Eskom to &39;CCC+&39;  and &39;zaB&39; from &39;B-&39; and &39;aBB-&39;, saying the power utility remained at risk of a distressed exchange situation or default in the next six months.

“We now believe there is a lower likelihood that Eskom would receive extraordinary support from the government, reflecting our view that government support for the utility over the past few months has been insufficient given that the utility’s liquidity concerns persist,” S&P said.

Ratings agency Moody&39;s downgraded the utility&39;s credit rating in January, saying it reflected the deterioration in Eskom&39;s financial and liquidity position with no prospect of a near-term equity injection by the government to shore up its weak financial profile.

Ratings agency Fitch also downgraded Eskom to ‘BB-‘ from ‘BB+’ with a negative outlook in January.

The agency cited weakening liquidity and the company’s uncertain capacity to fulfill its short-term financial commitments as the underpinning rationale for the move.

The troubled power utility was given a bailout of R5-billion for February by the Public Investment Corporation.

- Additional reporting ANA