JOHANNESBURG – Ratings agency Fitch has downgraded troubled power utility Eskom to ‘BB-‘ from ‘BB+’ with a negative outlook.
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.
This is the second ratings agency to downgrade the power utility’s ratings after Moody’s last week slashed its rating.
Eskom Interim Group Chief Executive, Phakamani Hadebe said: “We take note of the decision by Fitch to downgrade Eskom’s credit rating. We firmly believe that the measures being implemented to turn the company around are yielding the favourable results.
“We have seen renewed enthusiasm from financial markets to support Eskom’s funding plan and the preliminary engagements with market participants have had positive outcomes. We are cognisant of the challenges that the company is dealing with and we are geared to effectively resolving these challenges and improve Eskom’s operational and financial sustainability in the interest of the South African economy.”
Eskom’s acting Chief Financial Officer, Calib Cassim has said the next few months would be very difficult for the parastatal, which if it fails risks sinking the entire South African economy.
"We need to work speedily and with a level of urgency in order to resolve our financial challenge. We are making progress in expediently resolving Eskom’s financial challenges,” Cassim said.
“We will also continue engaging the rating agencies and the financial markets to address their concerns and improve investor sentiment and ultimately restore Eskom’s healthy liquidity position,” the acting CFO added.