Eskom Holdings SOC Ltd

CCC+ Overview Key strengths Key risks High likelihood of government support, with forthcoming debt relief agreement. Severe power generation shortfalls and reliability issues remain, impacting operating efficiency. Strong position in South Africa with more than 90% market share, and ownership of the country?s transmission networks. Unsustainable capital structure with high leverage and weak liquidity, exacerbated by operating challenges. Rising overdue debt owed by local municipalities and lack of cost-reflective tariffs. Electricity sector reforms will challenge Eskom?s dominant market position in generation over the long-term. The Debt Relief Agreement Act was signed into law on July 7, 2023. We think the government's ZAR254 billion financial support package for Eskom will address the company's debt maturity and interest obligations (totaling ZAR184 billion)

...Ongoing extraordinary support from the South African government, seen in the latest debt relief package, is key to Eskom reducing its refinancing risks and improving its near-term liquidity profile. The Debt Relief Agreement Act was signed into law on July 7, 2023. We think the government's ZAR254 billion financial support package for Eskom will address the company's debt maturity and interest obligations (totaling ZAR184 billion) from fiscal year 2024 (ending March 31, 2024) to fiscal year 2026. This will happen through subordinated loans provided by the government to Eskom over the period and the transfer of up to ZAR70 billion of loans to the government from Eskom's balance sheet, expected in calendar year 2026. This is...

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