Moody’s cuts Eskom, debt

Moody's Investors Service said it downgraded Eskom Holdings SOC Ltd.’s long-term corporate family rating and zero coupon eurobonds to B2 from B1.

Concurrently, the agency downgraded the company’s global medium-term note program and senior unsecured global medium-term notes to provisional B3/B3 from provisional B2/B2.

The probability of default rating was downgraded to B3-PD from B1-PD and the national scale rating long-term corporate family rating to Ba2.za from Baa2.za.

The outlook is negative. This concludes the review that was initiated on Jan. 26.

Moody’s said the action reflects the fact that, despite a number of improvements at the company in relation to its corporate governance and liquidity, there is limited visibility at this juncture as to Eskom's plans for placing its longer-term business and financial position on a sustainable footing.

Additionally, the rating factors the lack of any tangible financial support for the company in the February State Budget, and the liquidity and funding challenges Eskom may continue to face, the agency explained.

The downgrade follows the potential improvement of the South African government's credit profile, as captured by Moody's recent decision to confirm South Africa's Baa3 government bond ratings and assign a stable outlook.

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