Research Update: South African Electricity Producer Eskom Upgraded To 'B' On Revised Government Support; Outlook Stable

We expect the South African government's ZAR254 billion financial support package, as part of the Eskom Debt Relief Act signed into law on July 7, 2023, to cover Eskom's debt servicing and repayment obligations over the current and coming two fiscal years (ending March 31). In our view, Eskom's effective implementation of the debt relief transaction, including the disbursement and successful conversion of the subordinated loans into equity, will improve the group's credit quality, with S&P Global Ratings-adjusted debt to EBITDA falling below 8.5x by 2024 and to about 5.8x by 2025. The financial support package prompts us to positively reassess the likelihood of government support to Eskom to very high from high. Nevertheless, Eskom's operating performance and cash flow

...- We expect the South African government's ZAR254 billion financial support package, as part of the Eskom Debt Relief Act signed into law on July 7, 2023, to cover Eskom's debt servicing and repayment obligations over the current and coming two fiscal years (ending March 31). In our view, Eskom's effective implementation of the debt relief transaction, including the disbursement and successful conversion of the subordinated loans into equity, will improve the group's credit quality, with S&P Global Ratings-adjusted debt to EBITDA falling below 8.5x by 2024 and to about 5.8x by 2025. - The financial support package prompts us to positively reassess the likelihood of government support to Eskom to very high from high. - Nevertheless, Eskom's operating performance and cash flow will remain under pressure, even though the expected injections will reduce Eskom's liquidity risk, in our view. We therefore revised our assessment of Eskom's stand-alone credit profile to '###' from '###-', capturing...

Research Update