Moody's turns Eskom outlook to positive

Moody's Investors Service said it revised Eskom Holdings SOC Ltd.’s outlook to positive from negative and affirmed its ratings, including the Caa1 ratings of the zero coupon senior unsecured Eurobonds and the Caa2 ratings of the senior unsecured global medium-term notes of Eskom, as well as the (P)Caa2 rating on its global MTN program.

The agency also affirmed the Ba2 ratings on Eskom's notes, which benefit from the guarantee of the government of South Africa.

The rating action follows the finance ministry announcing its plans to take over a significant part of Eskom’s debt, Moody’s said.

“The positive outlook recognizes the commitment to address Eskom's unsustainable capital structure. A partial debt transfer to the government will improve the company's balance sheet and reduce pressure on cash flows through lower interest payments. Nevertheless, details are lacking as to the exact scope of the transaction and there are risks to execution, given Eskom's complex capital structure,” Moody’s said in a press release.

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