23 December 2010
Ratings agency Moody’s has lifted the outlook on Eskom’s senior unsecured bonds from negative to stable, citing the power utility’s continued shift towards cost-reflective tariffs and the strong support it enjoys from its shareholder, the South African government.
“The timing of the review by Moody’s is fitting given the progress made towards resolving the concerns raised by all rating agencies,” Eskom Finance Director Paul O’Flaherty said in a statement this month.
Firstly, he said, the company had posted improved financial results for the six months ended in September 2010.
“Secondly, the SA government has demonstrated its strong financial support by approving an increase in its guarantee limit from R176-billion to R350-billion and proposing an equity injection of R20-billion, which is still subject to [the] government’s internal approvals.”
Eskom said the rating amendment would help it meet its commitment to providing South Africa with much-needed generation capacity, while maintaining the financial sustainability of the company.
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