S&P affirms Eskom, view stable

Standard & Poor's said it affirmed its long-term BBB+ foreign currency and A- local currency corporate credit ratings on Eskom Holdings Ltd., the South African electricity utility.

The outlook on both ratings is stable.

The affirmation reflects S&P's expectation that the effect of an upcoming regulatory review, significant capital expenditure requirements and restructuring of regional electricity distribution will have a neutral effect on Eskom's standalone credit quality, S&P said.

Eskom's ratings reflect its critical role in the development of the Republic of South Africa's economy through its electrification program. They also factor in the government's intention to remain supportive of Eskom's credit quality.

These strengths are offset by a weak financial structure, the requirement to maintain a supply-and-demand balance and longer-term exposure to the restructuring of the electricity industry in general, S&P said.

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