Moody's: Eskom view negative

Moody's Investors Service said it changed the outlook on the Baa2 senior unsecured bonds of Eskom Holdings Ltd. to negative from stable. This move reflects Moody's earlier action to change the outlook on the South African government's A3 foreign- and domestic-currency ratings to negative from stable.

Moody's said Eskom's Baa2 rating reflects a "high" level of potential government support in case of need in light of the company's strategic importance as the dominant electricity supplier and its current heavy capex build-out program to provide additional energy capacity to the country's economy.

This results in a material uplift to the fundamental credit assessment of Eskom (Baseline Credit Assessment of 13, equivalent to Ba3), as reflected in the Baa2 senior unsecured bond rating. The negative outlook on the South African sovereign rating is therefore a direct input into Eskom's rating, according to the agency.

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