Eskom signs R20bn loan facility

The financing is aimed at helping to improve the power utility's cash flow.

Eskom flags. Picture: EWN.

JOHANNESBURG - Eskom says it has signed a R20 billion loan facility with a consortium of both local and international banks to help improve the company's cash flow.

The deal comes just after the announcement that S&P has downgraded Eskom's credit rating - citing liquidity concerns and insufficient government support that could trigger a default.

S&P says the power utility remains at risk of facing a distressed exchange situation or default in the next six months despite securing R30 billion in short-term funding this year.

Eskom's Khulu Phasiwe says the recent loan agreement will help with the company's finances.

“This R20 billion that we are now receiving, I’m sure if S&P had waited a bit, they were going to issue a different statement. But it’s okay, I suppose because they needed to inform the market about how they felt about Eskom and the issues that are bedevilling Eskom."

Eskom says it remains hopeful that other ratings agencies will change their position now that it's signed the multibillion rand loan.

Phasiwe says: “We’re hopeful that the other remaining credit agencies will change their position and give Eskom a better rating.”