S&P Global Ratings has lowering power utility Eskom's corporate credit ratings and shifted its outlook to negative in the wake of a shock late night cabinet reshuffle by President Jacob Zuma last week.
It lowered Eskom’s foreign and local currency long-term corporate credit ratings to ‘B+’ from ‘BB-’ and its national scale long-term rating to ‘zaBB-’ from ‘zaBB+’.
S&P said in a statement the government-owned power utility was likely to receive extraordinary government support, but “we believe the government's ability to provide support has weakened”.
The negative outlook reflected that of the sovereign downgrade and uncertainty regarding the government's commitment and ability to provide timely support to Eskom if needed, it said.
S&P on Monday stripped SA’s foreign-currency debt of its investment status following the late night dismissal of Pravin Gordhan as finance minister.
It said the lowering of SA’s ratings reflected their view the deep divisions in the ANC-led government led to the Zuma’s Cabinet reshuffle and, including key ministry of finance, may weaken political and institutional stability.
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