Moody’s Eskom debt inclusion raises SA downgrade risk
The risk of South Africa losing its only investment-grade rating could increase now that Moody’s Investors Service has decided to include the state-owned power utility’s colossal debt load in the country’s overall fiscal-strength calculations.
Moody’s now includes Eskom’s government-guaranteed debt in its assessment of the nation’s fiscal situation because the utility can’t service its obligations without the state’s backing, it said in an emailed report Wednesday. The ratings company sees South Africa’s debt burden increasing to more than 70% of gross domestic product over the next few years, a trend that contrasts with Baa3-rated peers, which include Bahamas and Hungary, it said.
Read: SA’s debt surge must stop – Moody’s
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Source: moneyweb.co.za