South Africa received a rare piece of good news this week, as S&P Global Ratings upgraded Eskom’s long-term foreign- and local-currency credit rating from B to B+, with a stable outlook.
It is the first time since the early 2010s that the utility has seen upward movement in its credit profile, and it marks a turning point in the country’s long fight against load shedding, operational collapse and investor scepticism.
But while the official statements highlight Eskom’s improved operations and its first profit in eight years, the upgrade carries economic, social and market implications that go beyond the utility’s balance sheet.
It signals a potential shift in investor confidence, stabilisation in coal-dependent industries, a relief for households, and fresh momentum for South Africa’s energy transition trajectory.
S&P Global’s upgrade to B+ comes as Eskom reported profit before tax of R23.9-billion for the year to March 1 and continues to receive state support under a R254-billion debt-relief framework. Eskom says it delivered an uninterrupted supply 97.9% of the time this financial year and has recorded as many as 161 consecutive days without load shedding, while the generation fleet’s energy availability factor has been regularly
above 70% in recent months.
This matters because S&P and other ratings agencies have repeatedly warned that operational failures (not just financial weaknesses) were at the centre of Eskom’s credit downgrades over the past decade. A stable grid, even if still fragile, is now translating into a modest but real improvement in South Africa’s risk profile.
Electricity reliability has an outsized effect on South Africa’s GDP. The Reserve Bank estimates that severe load shedding can wipe 1-1.5 percentage points off annual growth. Reducing that risk alone improves the medium-term outlook.
Eskom’s ratings upgrade is already dddstors are reassessing the risk attached to the utility, and by extension, the wider economy. The rating upgrade remains firmly in sub-investment-grade territory and operational gains must hold through 2026 for confidence to strengthen materially.
Part of that shift comes from Eskom’s gross debt-to-earnings before interest, taxes, depreciation, and amortisation ratio has improved to 4.90 from 11.58 in just one year.
In parallel, South Africa’s 10-year government bond yield has eased to around 8.6%, showing that the market is beginning to price in slightly lower sovereign risk.
The upgrade also reduces the immediate risk premium attached to long-term investment in South Africa. A more predictable electricity supply also reduces uncertainty for sectors such as mining, metals, manufacturing and logistics.
Eskom remains the single largest coal buyer in the country, and a stabilising utility means coal demand becomes more stable, reducing uncertainty for major producers such as Exxaro, Seriti and Thungela.
If Eskom continues its operational recovery, the next two years could mark the beginning of a true turnaround, not just for the utility, but for the country’s economic resilience and long-term sustainability.
