Eskom is confident about its current funding status though the cost of debt would increase after the S&P Global and Moody’s rating agencies lowered the power supplier’s credit rating and put it on review subsequently.
Eskom chief financial officer Anoj Singh said 72 percent of Eskom’s current fiscal year’s funding amounting to R72 billion would be secured by the end of April.
Singh said the funding requirement for financial year 2017/18 was thus not compromised and was in line with the execution of Eskom’s funding plan.
“We are confident that we will successfully execute Eskom’s funding plan over the next five years, backed by the availability of the government guarantees. The only challenge that Eskom will have to contend with will be the higher cost of debt,” Eskom said.
Singh’s comments follow S&P Global Ratings announcement lowering Eskom’s long-term corporate credit rating to ‘B+’ from ‘BB-‘ following the ratings action to downgrade South Africa’s long-term foreign currency rating credit to “junk status”.
Meanwhile, Moody’s Investor Services on Wednesday also announced their decision to place Eskom’s Ba1 senior unsecured Medium Term Note rating on review for downgrade.
The rating agency has simultaneously placed Eskom’s global scale corporate family rating and its national scale rating on review for downgrade.
Moody’s review decision on Eskom also follows the rating agency’s decision to place the Sovereign’s Baa2 bond rating on review for a downgrade.