S&P Upgrades Eskom’s Credit Rating Amid Financial and Operational Improvements

The upgrade is largely attributed to the R254 billion Eskom Debt Relief Act, signed into law in 2023, which ensures the utility’s ability to meet debt servicing and repayment commitments until 2026.

S&P Global Ratings has upgraded Eskom’s long-term global-scale foreign and local currency ratings from stable to positive, reflecting significant progress in addressing the utility's financial and operational challenges. This milestone underscores the impact of government bailouts and strategic reforms aimed at restoring South Africa's power utility to financial health.

S&P affirmed the following ratings for Eskom:

A ‘B’ issue rating on the group’s senior unsecured debt, up from ‘CCC+.’A ‘BB-’ foreign currency issue rating on government-guaranteed debt.

A national scale issuer credit rating upgrade from ‘zaBBB’ to ‘zaBBB+’, with the short-term national scale rating reaffirmed at ‘zaA-2.’

Key Drivers Behind the Upgrade

The upgrade is largely attributed to the R254 billion Eskom Debt Relief Act, signed into law in 2023, which ensures the utility’s ability to meet debt servicing and repayment commitments until 2026. This comprehensive relief package significantly reduces liquidity risks, stabilizes Eskom’s financial position, and improves its creditworthiness.

Eskom’s Leadership Responds

Eskom Group Chief Executive Dan Marokane emphasized that the upgrade reflects the utility's progress in both financial management and operational efficiency.

“This upgrade sends a strong signal to investors and stakeholders, reaffirming confidence in Eskom’s capacity to drive energy security and achieve long-term sustainability. Initiatives such as improving generation performance and achieving over R16 billion in diesel savings demonstrate our commitment to efficiency and profitability,” said Marokane.

He highlighted that maintaining this trajectory will reduce reliance on government support and place Eskom on a sustainable path.

Operational Gains and Strategic Goals

The power utility cited advancements in generation recovery and strengthened governance structures as pivotal in achieving its credit rating improvement. Eskom has also prioritized addressing systemic issues such as crime and corruption, which have historically hampered its operational reliability.

The utility has committed to enhancing its capacity for energy generation while adapting to new energy challenges, aiming to support South Africa’s economic growth and contribute to energy stability across sub-Saharan Africa.

Broader Implications

The ratings upgrade comes at a crucial time for Eskom as it seeks to attract private-sector investment and implement long-term reforms. Improved creditworthiness is expected to lower borrowing costs, which will enable further investments in infrastructure modernization and renewable energy projects.

Eskom reiterated its dedication to "futureproofing the organization" through initiatives that prioritize energy security and governance while aligning with South Africa’s Just Energy Transition strategy.

Looking Ahead

With the enhanced credit rating and ongoing operational improvements, Eskom is positioned to build on its recent successes, supporting the government’s broader goals of economic revitalization and ensuring energy security for South Africa’s industries and households.