Standard & Poor’s (S&P) has downgraded Eskom’s long-term credit rating to BB+ following the suspension of four of its senior officials, it said on Thursday.
This had led the ratings agency to have less confidence in the company’s corporate governance arrangements and its standalone credit profile, primary credit analyst Karim Nassif said.
“The negative outlook reflects our opinion that material execution risk remains associated with the government’s support plan, and that Eskom’s operating performance has not yet stabilised due to rising costs and the very tight generation capacity margin in South Africa.”
Eskom’s previous S&P rating was BBB-.
A BB+ rating, also known as a “junk” rating, is one of the lowest investment grade ratings that a ratings agency assigns.
Last week, Eskom chief executive Tshediso Matona, finance director Tsholofelo Molefe, group capital executive Dan Morokane, and commercial and technology executive Matshela Koko were asked to step aside as the power utility embarked on a fact-finding inquiry.
In recent months, Eskom has battled to keep the lights on since the collapse of one of its coal storage silos, diesel shortages and maintenance issues. — Sapa