S&P Upgrades Eskom’s Credit Ratings as Turnaround Plan Boosts Stability and Profitability

According to Eskom, the rating upgrade is extensive, covering not only the entity’s long-term credit position but also multiple categories of its debt obligations.

Global ratings agency S&P Global Ratings has upgraded Eskom’s foreign and local currency long-term credit ratings from B to B+, marking a significant vote of confidence in South Africa’s largest power utility after years of operational strain and financial instability. The agency also affirmed a stable outlook, indicating that Eskom’s recent progress is expected to hold steady over the medium term.

Broad Rating Improvements Reflect Renewed Institutional Strength

According to Eskom, the rating upgrade is extensive, covering not only the entity’s long-term credit position but also multiple categories of its debt obligations.

• Senior secured and unsecured debt has been upgraded in line with the improved company outlook.

• Government-guaranteed foreign currency debt saw an even more notable boost, rising from BB- to BB+, reflecting enhanced confidence in Eskom’s ability to honour its obligations with state backing.

• Eskom’s national scale rating has strengthened from zaBBB+/zaA-2 to zaA/zaA-1, reinforcing perceptions of improved creditworthiness within South Africa’s financial system.

S&P cited the measurable success of Eskom’s multi-year Turnaround Plan, which has addressed chronic generation instability, financial losses, and governance weaknesses that previously undermined investor confidence.

Operational Improvements Signal a Shift Away From Crisis

The rating agency highlighted Eskom’s substantial operational progress, which the utility says includes a marked increase in electricity availability. In the current financial year, Eskom delivered power 97.9% of the time, a notable improvement from 96% in FY2025.

This reflects a sustained reduction in unplanned breakdowns, more disciplined maintenance planning, and stabilisation of the generation fleet — achievements that were considered unlikely just two years ago during the height of load shedding.

Eskom noted that these improvements have not only enhanced energy reliability for households and businesses but have also lowered the financial burden associated with diesel usage for open-cycle gas turbines and emergency interventions.

Financial Turnaround: First Profit in Eight Years

Just as significantly, Eskom reported its first profit in eight years during FY2025 — a milestone that has played a central role in strengthening the company's credit outlook. This financial recovery is attributed to:

• Improved operational efficiency

• Reduced reliance on emergency generation

• Stronger revenue collection

• Cost containment measures

• Enhanced governance and oversight

S&P indicated that sustained profitability would be a key factor in future rating considerations, particularly as Eskom continues restructuring under the unbundling process that will separate generation, transmission, and distribution functions.

Leadership Perspective: A New Era for Eskom

Eskom Group Chief Executive Dan Marokane, who has been at the forefront of the utility’s stabilisation efforts, said the rating upgrade confirmed the effectiveness of the company’s strategic reforms.

“The turnaround plan has been pivotal in restoring Eskom’s operational and financial stability. We have moved decisively from a generation crisis to a phase of reliability and disciplined management. Our focus remains on providing affordable, secure electricity for South Africa while driving the transition to lower-carbon energy,” Marokane said.

Marokane emphasised that while the improvements are encouraging, Eskom must maintain discipline, accelerate infrastructure modernisation, and support South Africa’s transition toward a diversified energy mix.

Broader Implications for South Africa’s Economy and Energy Future

The ratings upgrade is expected to strengthen investor confidence not only in Eskom but in the broader South African energy sector. Improved creditworthiness lowers borrowing costs, supports the utility’s capital investment needs, and reassures markets that the country’s electricity supply is becoming more stable.

Economists note that as Eskom progresses in its unbundling and renewable integration strategies, improved financial health will be essential for attracting private-sector participation and scaling new energy projects.

A Positive Turning Point, but Work Continues

While S&P’s upgrade signals meaningful progress, analysts caution that Eskom must stay committed to improving plant performance, reducing debt, and ensuring governance reforms remain embedded. The utility’s turnaround remains a multiyear project, requiring consistency and continued policy support from government.

Still, for the first time in nearly a decade, Eskom enters a financial year with strengthened ratings, improved reliability, and renewed credibility — a foundation that could reshape South Africa’s energy trajectory.