Fitch affirms Eskom ratings

Fitch Ratings said it has affirmed Eskom Holdings' long-term national rating at AAA(zaf), its short-term national rating at F1+(zaf) and its long-term international local currency rating at A-.

The outlook is stable.

Fitch said Eskom's ratings reflect its leading market position in the South African electricity industry. The rating further reflects the flexibility and control over its assets it enjoys being vertically integrated. Eskom is wholly owned by the South African government. Although the state does not guarantee outstanding debt, Fitch recognizes implicit government support due to the economy's dependence on Eskom's services.

Fitch also said the ratings reflect Eskom's improved financial profile over the past five years. Eskom has grown revenue at a five-year compound rate of 10%, driven largely by a 3% increase in consumption over the same period and rising tariffs. For more than a decade, tariff increases have been less than inflation, which has resulted in margin pressure. Operating margins decreased to 21% from 25% between fiscal 1999 and fiscal 2003.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.