Finweek English Edition - - THE WEEK -

Credit rat­ings agency Stan­dard & Poor’s (S&P) main­tained Eskom’s BB- rat­ing – three notches be­low in­vest­ment grade – even though it be­lieves the util­ity’s liq­uid­ity po­si­tion and abil­ity to ser­vice its debt with­out gov­ern­ment sup­port have weak­ened. The de­te­ri­o­ra­tion in the out­look for Eskom’s fi­nances is partly due to credit reg­u­la­tor Nersa grant­ing a tar­iff in­crease of only 2.2% for the 2018 fi­nan­cial year, com­pared with S&P’s pre­vi­ous ex­pec­ta­tion of at least an 8% in­crease. As a re­sult, S&P is fore­cast­ing neg­a­tive free cash flows of up to R55bn in the 2018 fi­nan­cial year, in­creas­ing the util­ity’s re­liance on debt fund­ing and ac­cel­er­at­ing the draw­down un­der its R350bn gov­ern­ment guar­an­tee, it said.

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