Transnet and Eskom bonds are now more highly rated than US government bonds, according to the latest ratings by Fitch and Moody’s Investment Services.
After revising the parastatal’s outlook last month, Fitch affirmed Eskom’s national long-term rating at AAA(zaf) with a stable outlook.
The agency also affirmed Transnet’s government guaranteed bond issue at AAA(zaf).
The utility’s national long-term rating was affirmed at AA-(zaf) with a stable outlook.
These ratings meant that the two South African utilities were now more creditworthy than the US after rating agency Standard and Poor’s (S&P) downgraded the country’s credit rating from the top-notch AAA on Friday to AA+.
The favourable rating would ease the cost of borrowing in international markets for both Eskom and Transnet as they were currently seeking funds for multibillion-rand expansion programmes.
S&P adjusted the ratings and outlooks of the two parastatals in January, moving Eskom up to stable from negative, and affirmed the company’s long-term South Africa national scale rating at ZaAA and long-term foreign and local currency corporate credit ratings at BBB+.
My note: This report is incorrect in that it assumes AAA(zaf) is the same as AAA worldwide. In fact, AAA(zaf) is far inferior to AAA globally. Unfortunately the journalist and Business Report are mistaken. Nevertheless, it makes for fun reading.