Finance Minister Enoch Godongwana’s indication that the government could take over a substantial portion of Eskom’s debt has prompted Moody’s Investors Service to raise its outlook on the power utility’s debt ratings to positive for the first time since 2007.
Bloomberg reports that Moody’s boosted the outlook from negative, ‘signalling that the next ratings action may now be an upgrade instead of another downgrade’.
According to the report, Joanna Fic, senior vice president at Moody’s, said Eskom’s rating had been on a downward trend since 2008 and the outlook marks the potential for a change in that course.
Godongwana announced in his mid-term budget policy statement last week that between one third and two thirds of Eskom’s approximately R400 billion of debt would be shifted to the government’s balance sheet.
Moody’s said in an emailed statement on Monday: ‘The positive outlook recognises the commitment to address Eskom’s unsustainable capital structure.
‘A partial debt transfer to the government will improve the company’s balance sheet and reduce pressure on cash flows through lower interest payments.’