S&P: Eskom on developing watch

Standard & Poor's said it revised the CreditWatch implications of the A- local-currency corporate credit rating and zaAA+ long-term national scale rating on Eskom Holdings Ltd. to developing from negative.

The BBB+ foreign-currency corporate credit rating and zaA-1 short-term national scale rating are still on CreditWatch with negative implications.

S&P said the revision reflects Eskom's announcement on Sept. 23 that it submitted an application to the National Treasury for guarantees on all existing and future debt.

Ratings reflect the company's critical role in the development of South Africa's economy through its electrification program, strong electricity demand growth and a more supportive regulatory regime following the introduction of multiyear price reviews, the agency said.

These strengths are offset by substantial capital expenditure program to increase generation capacity, increased pressures on primary energy costs and inflation, and the potential restructuring of the power industry in the longer term, the agency noted.

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