Business Maverick: Eskom’s Gain Is South Africa’s Pain as Investors Balk at Debt

part of the 230 billion rand earmarked for Eskom over the next 10 years. The Treasury hasn’t budgeted for additional support over and above the 23 billion rand allocated in February for this and each of the next two years.

“Additional front-loaded support will mean an increase in bond issuance as revenue and cost-cutting measures are currently insufficient to fund Eskom’s support,” said Mike van der Westhuizen, a portfolio manager at Citadel Holdings Ltd. in Johannesburg. “Until we have exact numbers in terms of immediate support needed, or the actual plan, it’s difficult to calculate the effect on the fiscal situation.

The premium of 20-year bonds over two-year securities steepened on Friday to the most since January as investors priced in the risk posed by Eskom to the country’s long-term debt path, according to Alvin Chawasema, a trader at Sasfin Securities Ltd. in Johannesburg. A wider-than-forecast budget deficit and failure to curb debt could result in South Africa losing its last remaining investment-grade credit rating at Moody’s Investors Service. Yields on benchmark rand-denominated bonds due December 2026 climbed by the most in more than a month on Friday, and that may just be the start, said Van der Westhuizen.

“The market is far too complacent at current yields on South African government debt,” he said. “Given the lack of clarity around Eskom, and other structural reform for that matter, the risks are heavily and disproportionately skewed towards bond weakness. The current debt-to-GDP trajectory does not look healthy at all.”

'The current debt-to-GDP trajectory does not look healthy at all.” No kidding. 😒

United States United States Latest News, United States United States Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Satawu to explain missing pensions - SABC News - Breaking news, special reports, world, business, sport coverage of all South African current events. Africa's news leader.South African Transport and Allied Workers Union (SATAWU), has moved to explain how R65 million worth of pension money went missing from its coffers. The money, meant for orphans of deceased mineworkers, was allegedly laundered by the union's former secretary general Zenzo Mahlangu, among others.
Source: SABC News Online - 🏆 32. / 51 Read more »

Retrenchments looming at MultiChoice - SABC News - Breaking news, special reports, world, business, sport coverage of all South African current events. Africa's news leader.MOST READ: Retrenchments looming at MultiChoice Broadcaster MultiChoice has announced that it will be shedding more than two-thousand jobs in a retrenchment drive. The bulk of affected employees are in the call and service centres. And the so called president says he will create joba This is as a result of MYANC economic and political policies. CR better start sorting out this economy..... Netflix 🤔?
Source: SABC News Online - 🏆 32. / 51 Read more »