The credit metrics of South African power utility ESKOM Holdings SOC Ltd. (ESKOM) are weakening due to insufficient tariff increases to fund the company's large capital expenditure program, and to rising operating costs. At the same time, we believe that ESKOM's business risk has increased due to regulatory risk, construction delays, and weakened profitability. As a result, we are lowering ESKOM's stand-alone credit profile (SACP) to 'b-' from 'b', and revising the company's business risk profile to "weak" from "fair." In addition, we are affirming our 'BBB' foreign and local currency issuer credit ratings on ESKOM, in line with our criteria on government-related entities, and to reflect our view that the likelihood of extraordinary government support for ESKOM remains "extremely
