On July 27, 2018, S&P Global Ratings assigned its 'BB' long-term foreign currency issue credit rating to ESKOM Holdings SOC Ltd.'s proposed notes of up to $1.5 billion, to be guaranteed by the government of South Africa. We equalize the rating on Eskom's proposed notes with the long-term foreign currency sovereign credit rating on South Africa (BB/Stable/B), based on the unconditional and irrevocable guarantee by the government. Eskom (CCC+/Negative/--), 100% owned by the South African government, is an integrated national electricity utility providing over 90% of South Africa's electricity generation, transmission, and distribution. In our view, the possibility of a distressed exchange or default at Eskom over the next six months persists. Furthermore, Eskom has been a recipient of extraordinary
