Johannesburg - Public Enterprises Minister Lynne Brown sought to reassure markets yesterday as a second money manager said it would not lend to Eskom and as investment sentiment soured.
Denmark’s Jyske Bank said it would not lend to Eskom after Futuregrowth Asset Managers, the nation’s biggest specialist fixed income manager, said it had stopped lending to state-owned enterprises (SOEs) amid governance concern.
“We pulled the plug,” Rune Hejrskov, a senior money manager at the Denmark-based bank said yesterday. “I could easily see more lenders follow suit. We see issues on lending going forward and more governance issues.”
Finance Minister Pravin Gordhan has been at loggerheads with President Jacob Zuma over the minister’s call to fire the tax chief for insubordination and replace the board of loss-making SAA.
The Treasury has also clashed with Eskom about its efforts to review coal supply contracts with a company linked to the Gupta family, who are friends with Zuma and in business with his son.
Questions over governance at Eskom might increase, Hejrskov said.
The government is battling to contain the fallout as the spat derails investment and threatens the slowing economy.
Brown said: “I want to assure all lenders and investors that Eskom and Transnet are credible and reliable borrowers with strong credit fundamentals as evidenced by their respective credit profiles.”
She said their performances over the past financial year confirmed their strong governance structures, including the stable boards of directors and executive committees.
“I have recently concluded Eskom and Transnet’s annual general meetings,” she said, adding that the boards had performed their fiduciary duties and both companies had unqualified audit reports.
Eskom chief financial officer Anoj Singh said: “As at the end of August 2016, Eskom has available liquidity of approximately R38 billion and has secured more than 57 percent of its borrowing requirement of R69bn for the financial year 2016/17.
“Consequently, the announcement by Futuregrowth Asset Managers does not place Eskom’s funding plan at risk and I am confident the funding for the year will be raised.”
It said it would engage with the local asset manager and wider investment community.
Transnet spokesman Molatwane Likhethe said Transnet viewed itself as a credible and reliable borrower with strong credit fundamentals.
However, the investment community rallied behind Futuregrowth.
Allan Gray investment managers said ongoing uncertainty at state-owned firms could impact investment decisions.
“We strongly support the sentiments by Futuregrowth,” said Philip Bradford, the head of fund management at Sasfin.
BUSINESS REPORT