CREDIT ratings agency Moody's yesterday called the government's planned R20-billion equity injection into Eskom credit-positive.
The government announced that it would inject at least R20-billion of equity into Eskom to be funded through the sale of non-strategic state assets‚ although no timetable was provided.
The government said‚ if necessary‚ it could consider providing additional support to Eskom by converting its existing R60-billion subordinated loan to equity.
At the same time‚ itconfirmed that Eskom's additional borrowings‚ expected to be about R50-billion over the medium term‚ would need to be accommodated within the existing guarantee facility, as no new guarantees would be issued.
"We view the announcement as creditpositive as the proposed equity injection would provide much-needed liquidity and ease the short-term funding pressure on Eskom," Moody's said.
"It also reinforces our assumption of high probability of government support for Eskom under our rating methodology for government-related issuers.
"Given a standalone credit quality commensurate with a low speculative-grade profile‚ Eskom's current Baa3 rating relies on the [state] support we expect would be provided in a distress scenario."
However‚ the effect of the proposed measures on Eskom's credit metrics would be marginal‚ the ratings agency said. – BDPro