Eskom to issue debt as rating view improves

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Johannesburg - Eskom, which generates 95 percent of South Africa’s electricity, will look to sell more debt as projects to build more capacity remain on schedule.

“We’re very pleased with some of the noises we’ve been getting from some of the ratings agencies recently, and we have no doubt that we would be able to feature well in the international bond market,” Steve Lennon, the utility’s sustainability executive, said in an interview in Davos on Wednesday. “We’ll continue to tap the local and international bond market.”

After delays including labour strikes and contractors missing deadlines, the company estimates it will complete the first unit of the planned 4 764 megawatt (MW) Medupi power plant in the second half of this year. Fitch Ratings upgraded the utility’s national long-term rating one step to AAA, the highest assessment, last week.

The yield on Eskom’s $1 billion (R10.9bn) of debt due in August 2023 had fallen 8 basis points this year to 6.38 percent last week, the lowest since November 1 last year.

“I don’t anticipate further delays” on construction of the Medupi plant, Lennon said. “That’s the programme that we’re still working towards; we’re optimistic that we will be there,” he said.

The 4 800MW Kusile plant “is also on track”, Lennon said.

South Africa would not see a repeat of the rolling blackouts that cut power to industrial users in 2008, he said, as great strides had been made in energy efficiency. – Bloomberg

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