S&P downgrades Eksom

Standard & Poor’s said it lowered the long-term local- and foreign-currency ratings on Eskom Holdings SOC Ltd. to BB+ from BBB-.

The outlook is negative.

The agency also said it lowered the long- and short-term South Africa national scale ratings to zaA/zaA-2 from zaAA-/zaA-1.

The company’s stand-alone credit profile also was downgraded to CCC+ from B-, leading to the downgrade of its long-term rating to BB+ from BBB-.

The downgrade reflects the current weak regulatory advantage under the framework supervised by the national energy regulator of South Africa, S&P said.

The ratings also reflect important execution and operational risks associated with Eskom’s very large capital expenditures program, which has been subject to successive delays at a time when South Africa’s reserve margin remains stretched, the agency said.

The company also has a highly leveraged financial risk profile with stand-alone credit metrics that are expected to remain weak over the medium term due to continued delays in implementing tariffs, S&P said.

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