JOHANNESBURG, South African State-owned power utility Eskom, taking note of decisions by two leading international rating agencies to cut its credit rating, says it is committed to restoring positive lender and investor sentiment to unlock access to the markets.

Eskom’s acting Chief Financial Officer, Calib Cassim, said here Wednesday that the utility was committed to ensuring an improvement in its liquidity levels. “We remain positive that with the co-operation of the relevant participants, the funding plan can still be executed, albeit under challenging conditions. This will strengthen our liquidity and propel us towards positive cash flows, said Cassim.

Last week, the power utility said it noted that Fitch Ratings had placed it on a negative rating watch and that it was working to avert a downgrade. Fitch Ratings has placed Eskom’s long-term local currency Issuer Default Rating (IDR) and unguaranteed local currency senior unsecured ratings of ‘BB ‘ on Rating Watch Negative (RWN), said Eskom at the time.

On Wednesday, Moody’s Investor Service and Standard and Poor’s (S and P) decided to cut the utility’s credit rating.

S and P lowered Eskom’s long-term foreign and local currency corporate credit rating to ‘B-‘ from ‘B ‘, with a negative outlook. S and P simultaneously revised Eskom’s stand-alone credit profile (SACP) to ‘ccc-‘ from ‘ccc ‘.

Moody’s downgraded to ‘Ba3’ from ‘Ba2’ the long-term corporate family rating (CFR) of Eskom. In addition, the zero coupon eurobonds rating has similarly been revised to ‘Ba3 from ‘Ba2’ in line with the CFR and the global medium term note (GMTN) programme. The senior unsecured GMTNs of Eskom has been downgraded to ‘(P) B1/B1’ from ‘(P) Ba3/Ba3’. All of Moody’s ratings remain under review for further downgrades.

The rating decisions by the two agencies are largely driven by the downgrade of the sovereign credit rating last week. The rating agencies also cited Eskom’s deteriorating liquidity levels and continued constrained access to funding as some of the drivers for the actions.

S and P and Moody’s have also highlighted their assessment of the assumed likelihood of timely government support for Eskom from “extremely high” to “very high” and from “high to strong”, respectively.

Meanwhile, Eskom’s interim Group Chief Executive, Sean Maritz, said Eskom continued to engage with the relevant key stakeholders to ensure that current governance-related issues are expeditiously resolved.

We believe that the resolution of the governance-related issues will move Eskom towards improved financial sustainability and ensure security of power supply to continue aiding the country’s economic growth path, said Maritz.