Moody’s Investors Services has revised its outlook for South Africa’s utility provider Eskom from negative to positive, the global rating agency said in a statement.

The move comes after South Africa’s Finance Minister Enoch Godongwane said the government will take over some of Eskom’s 400 billion rands debt ($22.09 billion).

The rating agency affirmed the “Caa1” long-term corporate family rating (CFR) of Eskom Holdings SOC Limited. Concurrently, it affirmed the “Caa1” ratings of the zero coupon senior unsecured Eurobonds and the “Caa2” ratings of the senior unsecured global medium-term notes of Eskom, as well as the “(P)Caa2” rating on its global MTN programme.

Moody’s said the positive outlook recognises the commitment to address the utility’s unsustainable capital structure, the statement said, adding it believed partial debt transfer to the government would improve the company’s balance sheet and reduce pressure on cash flows through lower interest payments.

However, details are lacking as to the exact scope of the transaction and there are risks to execution, given Eskom’s complex capital structure, the rating agency said.

“Furthermore, debt relief cannot of itself address Eskom’s complex and multiple issues that include poor operational performance, the lack of cost-reflective tariffs and rising overdue debt from municipalities.”

The rating agency said that a modest debt reduction, absent tariffs that would allow Eskom to recover costs, an improvement in operational performance and collection of receivables, may not result in a sustainable transformation of Eskom’s credit quality as the company would likely grow its debt over time back to unsustainable levels.

(Editing by Seban Scaria seban.scaria@lseg.com )