Moody's Cuts South Africa's Eskom Citing Lack of Clear Plan

(Bloomberg) -- Eskom Holdings SOC Ltd. had its credit rating downgraded by Moody's Investors Service, which cited a lack of clarity regarding the South African power utility's plans to stabilize its finances.

Eskom's long-term corporate family rating was downgraded to B2, the fifth-highest junk rating, from B1.

“Despite a number of improvements at the company in relation to its corporate governance and liquidity, there is limited visibility at this juncture as to Eskom's plans for placing its longer term business and financial position on a sustainable footing,” Moody's said in a statement.

Read more about Eskom's financial challenges

The rating also accounts for “the lack of any tangible financial support for the company in the February state budget, and the liquidity and funding challenges Eskom may continue to face.”

Eskom is addressing the liquidity issues, interim Group Chief Executive Officer Phakamani Hadebe said.

“While we are disappointed with Moody's decision at this stage, the future looks promising,” he said in a statement.

To contact the reporter on this story: Liezel Hill in Johannesburg at lhill30@bloomberg.net.

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Ana Monteiro, Renee Bonorchis

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