Business Report reported that a strong investment grade assists Eskom in accessing debt in an affordable manner.

Responding to a Fitch Rating commentary, Mr Paul O'Flaherty finance director of Eskom said that South Africa's power legacy is dependent on Eskom being self funding. He added that "This requires that Eskom continue to focus on being a world class utility with a strong investment grade which assists Eskom greatly in accessing debt in an affordable manner for the ultimate benefit of the South African economy."

Fitch Ratings has assigned Eskom long term local currency Issuer Default Rating as 'A', its national long term rating at 'AAA (zaf)' and its national short term rating at 'F1+ (zaf).

The outlook on the long term IDR remains negative due to weakening over the short term of credit metrics on the back of the continued roll out of Eskom's partially debt funded capital build program. The national long term rating is stable.

In its statement, Fitch cited demonstrated government support for Eskom and the agency's expectation that energy tariffs will continue to move towards levels that are reflective of costs over the next five years, supporting the normalization of Eskom's credit profile over this period.

Mr Roelof Steenekamp director in Fitch's South African Corporate team said that "Government support reflects Eskom's importance to both the country's energy needs and the broader South African economy. Explicit financial support is evident in the form of a flexible dividend policy, expected injection of additional equity during 2011, and the approval in 2008 of a ZAR 60 billion subordinated loan and significant government's guarantees for Eskom's current and future debt."

(Sourced from www.busrep.co.za)