Eskom Holdings SOC Ltd., South Africa’s state-owned power utility, has received a notable credit rating upgrade from S&P Global Ratings. The rating was elevated from CCC+ to B, reflecting increased financial stability. The upgrade acknowledges the South African government’s significant financial backing, which includes a substantial R254 billion support package under the Eskom Debt Relief Act.
This funding aims to alleviate Eskom’s debt servicing pressures over the next two fiscal years. According to S&P, this support mitigates liquidity and refinancing risks for the company, despite ongoing challenges in operational efficiency and generation capacity.
The improved rating was accompanied by a stable outlook, signaling confidence in Eskom’s financial management under the new framework. This upgrade follows a similar move by Moody’s in September, which boosted Eskom’s rating to B2. However, Fitch Ratings continues to maintain a comparable rating score, indicating continued caution from credit agencies.
While the financial restructuring efforts have been praised, Eskom continues to grapple with operational challenges. Recent power cuts, exacerbated by fuel shortages and infrastructure issues, underscore the difficulties the utility faces in meeting national electricity demands.
The upgrades signal potential for improved investor confidence but emphasize the need for sustained operational reforms to ensure long-term stability and service delivery improvements.
