Moody’s cut Eskom’s long-term corporate family rating, or unguaranteed debt, to B2 from B3, six notches below the investment grade level, with a negative outlook.On Friday, Moody's kept South Africa’s sovereign debt at Baa3, the lowest rung of investment grade, but revised the outlook on that rating to negative.
The paper set out a vision for a restructured electricity supply industry, where Eskom would relinquish its near-monopoly and compete with independent power producers to generate electricity at the least cost. “Important questions, including how the rights of existing creditors will be respected as Eskom is reorganised, remain unanswered,” the agency said.
Local analysts have said the plan does not appear to have full buy-in from President Cyril Ramaphosa’s Cabinet and the governing ANC.Moody’s said weak corporate governance and political sensitivity around Eskom’s tariffs and its high employment levels would compound the constraints on the turnaround plan.
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