RPT-Fitch Revises Outlook on Eskom & Transnet to Negative

Wed Jun 18, 2014 8:35am EDT

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June 18 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has revised the Outlooks on Eskom Holdings SOC Ltd (Eskom) and Transnet SOC Ltd (Transnet) to Negative from Stable and affirmed their Long-term local currency Issuer Default Ratings (IDR). A full list of rating actions is below.

KEY RATING DRIVERS

The rating actions follow the revision of the Outlook on South Africa's Long-term IDRs to Negative from Stable (see 'Fitch Revises South Africa's Outlook to Negative; Affirms at 'BBB'; dated 13 June 2014 at www.fitchratings.com).

Eskom ratings remain linked to those of the South African sovereign, based on Fitch's assessment of its legal, operational and strategic ties with the state as strong in accordance with the agency's 'Parent and Subsidiary Rating Linkage' criteria.

Transnet's 'BBB' IDRs reflect our view of its stand-alone profile as 'BBB-'. The single-notch uplift to 'BBB' reflects the strong strategic and operational links between Transnet and its parent, the sovereign. The Outlook on the foreign currency IDR is now constrained to Negative by the sovereign rating Outlook as we do not typically rate state owned corporates above the sovereign rating.

The rating actions are as follows:

Eskom Holdings SOC Ltd

Long-term local currency IDR: affirmed at 'BBB+'; Outlook revised to Negative from Stable

Senior unsecured local currency rating: affirmed at 'BBB+'

National Long-term rating affirmed at 'AAA(zaf)'; Outlook Stable

National Short-term rating affirmed at 'F1+(zaf)'

Please see 'Fitch Affirms Eskom at 'BBB+'; Outlook Stable' dated 2 August 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

Transnet SOC Ltd

Long-term foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable

Foreign currency senior unsecured rating affirmed at 'BBB'

Short-term foreign currency IDR: affirmed at 'F3'

Long-term local currency IDR: affirmed at 'BBB'; Outlook Stable

Local currency senior unsecured rating: affirmed at 'BBB'

Short-term local currency IDR: affirmed at 'F3'

National Long-term rating affirmed at 'AA(zaf)'; Outlook Stable

National Short-term rating affirmed at 'F1+(zaf)'

National senior unsecured rating affirmed at 'AA(zaf)'

National senior unsecured rating for notes guaranteed by South African government upgraded to 'AAA(zaf)'. This action reflects a recalibration of the higher end of the South African National Rating scale.

Please see 'Fitch Upgrades South Africa's Transnet to 'BBB'; Outlook Stable' dated 30 October 2013 at www.fitchratings.com for Key Rating Drivers and Rating Sensitivities.

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