Moody's pushed state power firm Eskom's credit rating deeper into subinvestment territory on Tuesday, saying a government plan to reorganise the cash-strapped South African firm would be hard to implement without explicit support from the cabinet.
Moody's cut Eskom's long-term corporate family rating, or unguaranteed debt, to B2 from B3, six notches below the investment grade level, with a negative outlook.
The rating firm also cut the power company's zero coupon eurobonds to B2 from B3.
The agency on Friday kept South Africa's sovereign debt at Baa3, the lowest rung of investment grade, but revised the outlook on that rating to "negative".
The government announced a sweeping overhaul of the power sector last Tuesday, confirming the break up of Eskom over the next three years and opening the industry up to more competition.
The paper set out a vision for a restructured electricity supply industry, where Eskom could relinquish its near-monopoly and compete with independent power producers (IPPs) to generate electricity at least cost.
Moody's said the plan could bring modest financial benefits for the company over the medium term but failed to address pressing, immediate issues.
"Important questions, including how the rights of existing creditors will be respected as Eskom is reorganised, remain unanswered," the ratings agency said.
"This makes any turnaround of the company's operations very difficult without a clear steer and support from the government."
Local analysts have said the plan does not appear to have full buy-in from President Cyril Ramaphosa's cabinet and the ruling African National Congress.
Moody's said weak corporate governance and political sensitivity around Eskom's tariffs and its high employment levels would compound the constraints on the turnaround plan.
The National Union of Mineworkers (NUM), which supported Ramaphosa's campaign for the ruling party presidency in 2017, has threatened to cause more power cuts over the government's decision to forge ahead with the plan to break up Eskom.