Over the next five years, Eskom Holdings SOC Ltd would face US$25 billion funding gap. The power utility in South Africa was expected to fail in plugging the hole through bond sales. This would further jeopardize the time frame for the building plants to prevent blackouts.
Yesterday was the seventh day when the profits on Eskom's dollar bonds climbed. The profits were supposed to be due on January 2021. The upsurge transpired after Eskom's statement on July 10 that it would still need ZAR50 billion equivalent to US$5 billion more than anticipated. The amount was required so that the power utility could meet the funding requirements in the five years to 2018.
The rate rose 40 basis points to 6.04% during the period. This was against a 2 basis point increase in South Africa's dollar debt which was due on March 2020. The climb was also versus a 9 basis point jump in the yield of JPMorgan Chase & Co.'s tracked emerging market utilities.
Eskom generated roughly 95% of the total power in South Africa. This week, it postponed the launch of the globe's fourth-largest coal-fired power plant. The launch would be at least six months following the labor interruptions and the discovery of defective boiler welds.
"The big question is how much they can raise," Morten Groth said though phone interview yesterday. Groth managed US$1.7 billion worth of emerging-markets bonds at Jyske Bank A/S in Silkeborg, Denmark, "Raising that money from markets in the traditional way would be tough. One potential could be raising money from a country like China, or a sovereign wealth fund."
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