Moody’s will announce its review of South Africa’s credit rating – if any – on Friday and with the recent spate of rolling blackouts, Eskom’s burgeoning debt, and a skittish economy, the review could go any which way.
“The main, immediate concern of many analysts is the implications for foreign investment in local currency bonds. A downgrade to sub-investment/junk by Moody’s would result in South Africa being removed from key bond investment indexes,” said Muller. “It is still unlikely to be as serious as an Eskom default, which the government is doing – and will continue to do – everything to avoid.”
As Eskom has stated previously, the diesel generators were never meant to operate as base load plants, and they have used a prodigious amount of fuel.