Fitch Ratings Affirms Eskom's Credit Rating, Notes Operational Improvements

Fitch Ratings has affirmed Eskom's credit rating at 'B' with a stable outlook, while recognizing improvements in the utility's operational performance through an upgrade to its standalone assessment.

Rating Decision Details

In an announcement made on Friday, 23 May, Fitch Ratings maintained Eskom Holdings SOC Ltd.'s Long-Term Local-Currency Issuer Default Rating (IDR) at 'B' with a stable outlook. More significantly, the agency revised Eskom's Standalone Credit Profile (SCP) upward from 'ccc-' to 'ccc+', marking a two-notch improvement.

The ratings agency cited ongoing operational improvements and projections of significantly higher earnings before interest, taxes, depreciation, and amortization (EBITDA) for Eskom between financial years 2025 and 2029 as key factors behind the standalone profile upgrade.

Eskom's Response

Eskom Group Chief Executive Dan Marokane welcomed the rating decision, stating: "The affirmation and positive revision on our credit rating profile by Fitch reinforces our determination to continue our efforts to turnaround Eskom's financial and operational performance."

Marokane emphasized that Eskom's objective remains reducing its dependence on government support and achieving financial sustainability – goals that have become increasingly central to the utility's strategy during the recent period of operational stabilization.

Additional Rating Actions

Beyond the main rating decision, Fitch also:

• Affirmed Eskom's senior unsecured debt at 'B' with a Recovery Rating of 'RR4'
• Maintained its senior unsecured guaranteed debt at 'BB-'

According to Fitch, the affirmation of Eskom's overall IDR reflects the strong links between the utility and the South African government (rated BB-/Stable) under the agency's latest Government-Related Entities (GRE) rating criteria.

Operational Context

This rating action follows Eskom's significant operational turnaround from the crisis conditions experienced throughout 2023, when the country faced power cuts on more than 300 days.

While Eskom's Energy Availability Factor (EAF) has declined slightly from its peak earlier this year – currently standing at 56.36% compared to 58.05% in early 2025 – it remains substantially improved from the sub-50% levels seen during the worst of the crisis.

Financial Outlook

The rating action suggests Fitch expects Eskom's financial performance to continue improving over the medium term, building on the operational stability achieved since March 2024. The ratings agency's upgraded standalone assessment indicates growing confidence in Eskom's internal capabilities, separate from government support.

However, the maintained 'B' overall rating indicates Eskom still faces significant challenges on its path to full financial sustainability, including managing its substantial debt burden and addressing municipal arrears that exceed R90 billion.

Key Terms Explained

Issuer Default Rating (IDR): A measure of an organization's overall credit risk and ability to meet financial commitments. Eskom's 'B' rating indicates it remains in the speculative category with significant credit risk.

Standalone Credit Profile (SCP): An assessment of a company's creditworthiness without considering government support. The upgrade from 'ccc-' to 'ccc+' shows Eskom's improved internal financial health.

EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization – a measure of a company's operating performance and cash-generating ability before accounting for capital structure and tax decisions.

Energy Availability Factor (EAF): The percentage of Eskom's total generation capacity that is available for use, accounting for planned and unplanned outages. Higher EAF means more reliable electricity supply.