Fitch: Denel unchanged

Fitch Ratings said that the ZAR 700 million allocated by the South African National Treasury to recapitalize Denel indicates that the government continues to support Denel (SOC) Ltd.'s turnaround strategy.

Fitch said it believes the equity injection is a step in the right direction for Denel's strategic long-term plan to be financially self-sustainable.

The agency said it always factored state support into Denel's AA(zaf) and F1+(zaf) ratings, but the form and timing of the recapitalization remain somewhat unclear.

The existing short-term debt guarantees of ZAR 1.85 billion are likely to remain in place and continued visible support from the government could result in a potential stabilization of the outlook, Fitch said.

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