Carol Paton Editor at Large

Eskom had good news over the weekend when credit ratings agency Moody’s Investors Service assigned an investment grade rating to the $4bn bond it hopes to issue in the foreign market in August. While Eskom’s foreign debt issuance has in the past not been guaranteed by the Treasury, the proposed dollar bond will be explicitly guaranteed by the state, with Moody’s awarding the rating in line with SA’s sovereign debt at Baa3. Moody’s rating for Eskom’s stand-alone debt is deep in junk territory at B3. Moody’s affirmed Eskom’s stand-alone rating at B3 with a negative outlook. It said the rating for the proposed bond "reflects the unconditional and irrevocable guarantee of the South African government. The guarantee will be issued under the government’s R350bn Guarantee Framework Agreement, of which R275m is currently allocated." Eskom has not issued debt in the foreign market since 2015. It also has not issued domestic debt at an auction since 2016, preferring the "private placement" of...

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