{"id":46880,"date":"2023-01-26T07:11:01","date_gmt":"2023-01-26T07:11:01","guid":{"rendered":"http:\/\/www.brandon.ddtest.info\/multisite-test\/eskoms-debt-plan-raises-hopes-for-investors-facing-long-wait-for-relief\/"},"modified":"2023-01-26T07:11:01","modified_gmt":"2023-01-26T07:11:01","slug":"eskoms-debt-plan-raises-hopes-for-investors-facing-long-wait-for-relief","status":"publish","type":"post","link":"http:\/\/www.brandon.ddtest.info\/multisite-test\/eskoms-debt-plan-raises-hopes-for-investors-facing-long-wait-for-relief\/","title":{"rendered":"Eskom&#8217;s debt plan raises hopes for investors facing long wait for relief"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<div class=\"article-body__context_widget__1xxEe article-body__element__2p5pI\">\n<div class=\"context-widget__content__1X4Oq\">\n<ul class=\"summary__summary__31feP\">\n<li data-testid=\"Body\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__medium__1kbOh text__body__yKS5U body__base__22dCE body__body_alt__2kEQu summary__point__NO-2F\">Investors see state taking on up to 2\/3rds of Eskom debt<\/li>\n<li data-testid=\"Body\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__medium__1kbOh text__body__yKS5U body__base__22dCE body__body_alt__2kEQu summary__point__NO-2F\">Details of timeline, size and mechanics of debt swap unclear<\/li>\n<li data-testid=\"Body\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__medium__1kbOh text__body__yKS5U body__base__22dCE body__body_alt__2kEQu summary__point__NO-2F\">Eskom&#8217;s international bonds on steady climb since start of 2023<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p data-testid=\"paragraph-0\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">JOHANNESBURG, Jan 26 (Reuters) &#8211; High hopes that South Africa&#8217;s government will next month lay out plans to take on a majority of the debt owed by beleaguered state utility Eskom have lifted the company&#8217;s bonds, providing some relief to investors facing a long and uncertain wait.<\/p>\n<p data-testid=\"paragraph-1\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">South Africa has been struggling for years to overhaul its state-power company which is plagued by corruption and mismanagement and reeling under a 400 billion rand ($23.3 billion) debt pile.<\/p>\n<p data-testid=\"paragraph-2\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Meanwhile, Eskom&#8217;s implementation of increasingly intense rolling blackouts has hamstrung growth in Sub-Saharan Africa&#8217;s most industrialised economy.<\/p>\n<p data-testid=\"paragraph-3\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Finance Minister Enoch Godongwana told Reuters last week he was <a data-testid=\"Link\" href=\"https:\/\/news.google.com\/world\/africa\/davos-2023-south-africa-plans-end-load-shedding-12-18-months-finmin-2023-01-16\/\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__medium__1kbOh text__large__nEccO link__underline_default__2prE_\">&#8220;sharpening his pencil&#8221;<\/a> to provide details, so far scarce, for taking on between one- and two-thirds of Eskom&#8217;s debt in his Feb. 22 budget presentation.<\/p>\n<p data-testid=\"paragraph-4\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">&#8220;The more debt the government is willing to take on, the better for Eskom, because it will help to reduce its interest costs, which is one of the big problems,&#8221; said Max Wolman, senior portfolio manager at Abrdn, which holds the bonds.<\/p>\n<p data-testid=\"paragraph-5\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Eskom&#8217;s debt pile is not just big, it is also complex.<\/p>\n<p data-testid=\"paragraph-6\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">According to the latest company report, just over 42% of its 396 billion rand burden is in domestic rand-denominated bonds and nearly a third is owed to development finance institutions including the World Bank and China Development Bank.<\/p>\n<p data-testid=\"paragraph-7\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Another 15% is international bonds, held by global asset managers such as PIMCO, BlackRock and Fidelity, according to recent filings. Citi says three-quarters of its bonds are government-guaranteed.<\/p>\n<p data-testid=\"paragraph-8\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Eskom&#8217;s international bonds could rally if the government takes on two-thirds of the debt, Wolman said, while limiting that to one third or carrying out the debt transfer over a long period of time could be negative.<\/p>\n<p data-testid=\"paragraph-9\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">While Godongwana said a transfer would happen <a data-testid=\"Link\" href=\"https:\/\/news.google.com\/world\/africa\/south-africa-finance-minister-nice-policy-useless-without-power-2023-01-12\/\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__medium__1kbOh text__large__nEccO link__underline_default__2prE_\">in phases<\/a> to keep South Africa&#8217;s debt-to-GDP levels stable, he did not provide details.<\/p>\n<p data-testid=\"paragraph-10\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">The plans have been years in the making with the government first pondering a debt transfer some four years ago, said Olga Constantatos, head of credit at Futuregrowth Asset Management<\/p>\n<p data-testid=\"paragraph-11\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">&#8220;The magnitude of the crisis at Eskom is escalating and we believe more urgent and focused action is needed,&#8221; she said.<\/p>\n<figure class=\"article-body__element__2p5pI\" data-testid=\"graphic-0\">\n<div class=\"reuters-graphic__image-container__2YWXt\">\n<div data-testid=\"StatefulImage\" class=\"stateful-image__container__hH_Q_ stateful-image__light__2XHJA\">\n<div data-testid=\"Image\" class=\"stateful-image__image__ThpeM\"><noscript><img src=\"https:\/\/fingfx.thomsonreuters.com\/gfx\/mkt\/lgvdklyodpo\/Eskom%20and%20South%20Africa%20bonds.PNG\" alt=\"South Africa and Eskom bonds\" title=\"\"\/><\/noscript><\/div>\n<\/div>\n<\/div><figcaption data-testid=\"Body\" class=\"text__text__1FZLe text__medium-grey__3A_RT text__regular__2N1Xr text__small__1kGq2 body__base__22dCE body__caption__3L8vY reuters-graphic__figcaption__1lRLn\">South Africa and Eskom bonds<\/figcaption><\/figure>\n<p data-testid=\"paragraph-12\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">While the situation is pressing, it could take a while before a transfer is actioned after the budget.<\/p>\n<p data-testid=\"paragraph-13\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">&#8220;There is likely to be little in terms of action on the back of this announcement,&#8221; said Alexander Rozhetskin at Citi. &#8220;We expect that Eskom will need to meet certain criteria before it can offload some of its debt on to the sovereign.&#8221;<\/p>\n<p data-testid=\"paragraph-14\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Citi is positive on Eskom debt, especially longer-dated issues which would reap more benefits from a transfer, predicting spreads could tighten at least 100 basis points.<\/p>\n<p data-testid=\"paragraph-15\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Eskom&#8217;s bonds seem to reflect part of that optimism, with some of its international issues up more than 8 cents on the dollar this year to trade at multi-month highs, Tradeweb data shows. , , ,<\/p>\n<p data-testid=\"paragraph-16\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Khanyisa Phika and Murendeni Nengovhela, economists at Alexforbes, a South African firm that holds Eskom debt, expect the government to present &#8220;a credible action plan&#8221; and take on 250 billion rand of its debt. But they also hope the government will make progress on another long-standing issue, namely splitting the behemoth into generation, transmission and distribution arms.<\/p>\n<figure class=\"article-body__element__2p5pI\" data-testid=\"graphic-1\">\n<div class=\"reuters-graphic__image-container__2YWXt\">\n<div data-testid=\"StatefulImage\" class=\"stateful-image__container__hH_Q_ stateful-image__light__2XHJA\">\n<div data-testid=\"Image\" class=\"stateful-image__image__ThpeM\"><noscript><img src=\"https:\/\/graphics.reuters.com\/ESKOM-DEBT\/ESKOM-DEBT\/gkplwxaoxvb\/chart.png\" alt=\"Reuters Graphics\" title=\"\"\/><\/noscript><\/div>\n<\/div>\n<\/div><figcaption data-testid=\"Body\" class=\"text__text__1FZLe text__medium-grey__3A_RT text__regular__2N1Xr text__small__1kGq2 body__base__22dCE body__caption__3L8vY reuters-graphic__figcaption__1lRLn\">Reuters Graphics<\/figcaption><\/figure>\n<p data-testid=\"paragraph-17\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Split or not, Eskom &#8220;should now be considered an extension of the sovereign, and bonds should trade as such&#8221;, JPMorgan analyst Zafar Nazim <a data-testid=\"Link\" href=\"https:\/\/news.google.com\/world\/africa\/jpmorgan-investors-should-buy-eskom-bonds-before-south-africa-budget-2023-01-17\/\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__medium__1kbOh text__large__nEccO link__underline_default__2prE_\">wrote in a note to clients<\/a>, encouraging investors to buy Eskom&#8217;s Eurobonds before the budget.<\/p>\n<p data-testid=\"paragraph-18\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">He estimated that even without the debt transfer, recently approved tariff increases of 18.6% for the 2023\/4 financial year and 12.7% for 2024\/5, combined with ongoing government cash injections, would cut Eskom&#8217;s net leverage to under three times by 2024\/5, from 6.5 times three years earlier.<\/p>\n<p data-testid=\"paragraph-19\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">Eskom&#8217;s diversity of creditors has given the company a wide range of funding avenues but it could also hold up any debt transfer, said Jones Gondo, an analyst at South Africa&#8217;s Nedbank.<\/p>\n<p data-testid=\"paragraph-20\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">&#8220;At any point, any of those groups can say we don&#8217;t like this,&#8221; Gondo said. &#8220;The transaction is not successful unless you transfer the full amount. You can&#8217;t have any kind of overhang in the execution of this.&#8221;<\/p>\n<p data-testid=\"paragraph-21\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__full_width__ekUdw body__large_body__FV5_X article-body__element__2p5pI\" style=\"font-size:20px\">($1 = 16.9762 rand)<\/p>\n<p><span data-testid=\"Text\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__default__UPMUu sign-off__text__PU3Aj\">Reporting by Rachel Savage and Kopano Gumbi in Johannesburg, additional reporting by Promit Mukherjee; Marc Jones and Jorgelina do Rosario, editing by Karin Strohecker and Kirsten Donovan<\/span><\/p>\n<p data-testid=\"Body\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__regular__2N1Xr text__large__nEccO body__base__22dCE body__large_body__FV5_X article-body__element__2p5pI\">Our Standards: <a data-testid=\"Link\" href=\"https:\/\/www.thomsonreuters.com\/en\/about-us\/trust-principles.html\" target=\"_blank\" class=\"text__text__1FZLe text__dark-grey__3Ml43 text__medium__1kbOh text__large__nEccO link__underline_default__2prE_\" rel=\"noopener\">The Thomson Reuters Trust Principles.<\/a><\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/news.google.com\/__i\/rss\/rd\/articles\/CBMic2h0dHBzOi8vd3d3LnJldXRlcnMuY29tL2J1c2luZXNzL2VuZXJneS9lc2tvbXMtZGVidC1wbGFuLXJhaXNlcy1ob3Blcy1pbnZlc3RvcnMtZmFjaW5nLWxvbmctd2FpdC1yZWxpZWYtMjAyMy0wMS0yNi_SAQA?oc=5\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Investors see state taking on up to 2\/3rds of Eskom debt Details of timeline, size and mechanics of debt swap unclear Eskom&#8217;s international bonds on steady climb since start of 2023 JOHANNESBURG, Jan 26 (Reuters) &#8211; High hopes that South Africa&#8217;s government will next month lay out plans to take on a majority of the &hellip;<\/p>\n","protected":false},"author":1,"featured_media":46881,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[161],"tags":[],"_links":{"self":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/46880"}],"collection":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/comments?post=46880"}],"version-history":[{"count":0,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/46880\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media\/46881"}],"wp:attachment":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media?parent=46880"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/categories?post=46880"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/tags?post=46880"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}