“Whilst Moody’s understands that there are no charges against the executives and no accusation of wrongdoing, the inquiry is credit negative for Eskom because it may affect investor sentiment,” Moody’s said in a statement. “Investor sentiment is key for the company given the need to access the debt capital markets to fund a very significant investment programme and re-finance debt maturities.”
Eskom’s liquidity position, which has been structurally weak, was currently supported by the proceeds from the credit issuance in February 2015, the agency said.
On February 12, President Jacob Zuma said in his state-of-nation address to Parliament that stabilising Eskom’s finances was a priority and the power utility would be given R23 billion to do so.
“The government will honour its commitment to give it around R23 billion in the next fiscal year,” he said at the time.
He acknowledged South Africa was experiencing serious energy constraints.
“[These] are an impediment to economic growth, and are a major inconvenience to everyone in the country.”
Overcoming the problem was uppermost in government’s priorities.
“We are doing everything we can to resolve the energy challenge,” the president said.
Moody’s said, in accordance with its rating methodology for government-related issuers, Eskom’s current Ba1 rating continued to be based on the agency’s expectation of a high probability of support from the South African government.
This reflected the company’s critical role as the supplier of virtually all of South Africa’s electricity.
On Thursday, Eskom chairman Zola Tsotsi said the four executives, including chief executive Tshediso Matona, had been asked to step aside as the power utility embarked on a fact-finding inquiry.
The other three are finance director Tsholofelo Molefe, group capital executive Dan Morokane, and commercial and technology executive Matshela Koko.
Non-executive board member Zethembe Khoza would become interim chief executive.