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Fitch Ratings has downgraded Eskom’s long-term local currency Issuer Default Rating (IDR) and unguaranteed local currency senior unsecured ratings to ‘BB-‘ from of ‘BB+’ and maintained the ratings on Rating Watch Negative (RWN). The rating agency also affirmed the government-guaranteed local currency senior unsecured debt ratings at ‘BB+’.

In their statement, Fitch cites weakening liquidity of Eskom and the company’s uncertain capacity to fulfil its short-term financial commitments as the underpinning rationale for their decision.

Eskom’s Interim Group Chief Executive Phakamani Hadebe said, “We take note of the decision by Fitch to downgrade Eskom’s credit rating. We firmly believe that the measures being implemented to turn the company around are yielding the favourable results. We have seen renewed enthusiasm from financial markets to support Eskom’s funding plan and the preliminary engagements with market participants have had positive outcomes.

We are cognisant of the challenges that the company is dealing with and we are geared to effectively resolving these challenges and improve Eskom’s operational and financial sustainability in the interest of the South African economy.”

Acting Chief Financial Officer Calib Cassim said: “The next few months will be difficult, but we need to work speedily and with a level of urgency in order to resolve our financial challenge.

We are making progress in expediently resolving Eskom’s financial challenges; we will also continue engaging the rating agencies and the financial markets to address their concerns and improve investor sentiment and ultimately restore Eskom’s healthy liquidity position.”

Issued by Eskom