Research Update: South African Power Company ESKOM Outlook Revised To Stable On Announced Government Support; 'CCC+' Ratings Affirmed

In our view, the recently announced government support package for ESKOM Holdings is still insufficient to cover ESKOM's remaining funding requirements for its fiscal year ending March 31, 2020 (FY2020). However, we believe that this, combined with improved access to external financing, cash-flow supportive tariffs, and favorable cost trends, could help ESKOM's sources of liquidity exceed projected uses for more than six months. We are therefore revising our outlook on ESKOM to stable from negative and affirming our 'CCC+' and 'zaB' ratings on the company, as well as all our ratings on ESKOM's debt (see the Ratings List below). The stable outlook reflects our view that the government's publicly stated commitment to provide ZAR23 billion per year of additional funding

...+ In our view, the recently announced government support package for ESKOM Holdings is still insufficient to cover ESKOM's remaining funding requirements for its fiscal year ending March 31, 2020 (FY2020). + However, we believe that this, combined with improved access to external financing, cash-flow supportive tariffs, and favorable cost trends, could help ESKOM's sources of liquidity exceed projected uses for more than six months. + We are therefore revising our outlook on ESKOM to stable from negative and affirming our '###+' and 'zaB' ratings on the company, as well as all our ratings on ESKOM's debt (see the Ratings List below). + The stable outlook reflects our view that the government's publicly stated commitment to provide ZAR23 billion per year of additional funding to ESKOM has reduced both the risk of funding shortfalls over the coming six months and uncertainty regarding the government's commitment to provide timely support to ESKOM....

Research Update