A flicker of light for Eskom, but load shedding still a risk
Fitch Ratings has affirmed Eskom's long-term credit rating and upgraded its Standalone Credit Profile (SCP) from 'ccc-' to 'ccc+'. This signals improving operations and finances, which is positive news.
A CCC+ rating simply means that the company is still in a very risky financial position, but it's doing slightly better than before. It's a small step up, but it still signals that there's a real chance it could struggle to pay its debts.
Fitch upgraded Eskom's credit rating because the company has improved its operations and expects to see a significant rise in earnings before interest, taxes, depreciation, and amortisation (EBITDA) from 2025 to 2029. This indicates that Eskom's generation units are performing better, which is important after years of poor performance and frequent blackouts.
The agency has confirmed Eskom's long-term local currency Issuer Default Rating (IDR) is at 'B' with a stable outlook. It also confirmed Eskom's senior unsecured debt rating at 'B' (with a Recovery Rating of 'RR4') and its senior unsecured guaranteed debt at 'BB-'. This shows increased confidence in Eskom's operations and its strong relationship with the government.
Eskom's Group Chief Executive, Dan Marokane, welcomed the news that Fitch has affirmed and improved the power utility's credit rating. He said this shows Eskom's commitment to improving its financial and operational performance. Marokane emphasised that the company's main goal is to reduce its dependence on government support by working towards long-term financial stability.
This development brings some hope that the end of Eskom's load shedding may be getting closer, but there are still many challenges ahead. Remaining Challenges and Public Impact
A recent upgrade in Eskom's credit rating shows some progress in its recovery efforts. This upgrade suggests that investor confidence is improving. However, the positive impact on the public will depend on better electricity delivery, less reliance on government support, and clear improvements in service performance.
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