CORPORATE GOVERNANCE
Umgeni bonds continue to trade despite concern
Futuregrowth has raised concerns that the water utility has no board
The JSE is taking no steps to suspend trade in two listed bonds issued by Umgeni Water, despite serious concern about corporate governance expressed by Old Mutual asset manager Futuregrowth, the state-owned water utility’s single biggest bond holder. Umgeni’s two bonds in issue are UG21, which matures in 2021, and UG26, maturing in 2026. UG21 trades at a yield of 10.7% and UG26 at 11.31%. Together the issues are worth R1.535bn. It also has a long-term loan from the European Investment Bank of R385m. The comparable R207 government bond was bid at 7.355% late on Thursday. Andre Visser, GM of issuer regulation at the JSE, said only that it was in talks with Umgeni "regarding their current governance arrangements to ensure compliance with the listing requirements". The JSE requires listed entities to have a chairman and a CEO, and that they may not be the same person, to provide a balance of power and authority. Under the Public Finance Management Act, Umgeni must have an accounting aut...
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