JOHANNESBURG, Oct 26 (Reuters) – Eskom’s dollar-denominated bonds rose on Wednesday after South Africa’s Treasury said the government would pay off some of the troubled state-owned company’s $22 billion debt.
The National Treasury said in its medium-term budget that it could only assume between one-third and two-thirds of the health debt, but it dedicated itself to expressing the main points or a timetable.
Eskom’s dollar-denominated bond in 2028 rose 3. 136 cents to 87. 465 cents on the dollar at 14:40 GMT, according to Tredeweb data, its highest value in a month and functionality among the utility’s dollar bonds.
Eskom has been mired in a currency crisis for years and is grappling with power outages that hit record highs this year, exacerbating a problem that has been a persistent drag on South Africa’s growth.
No resolution has been made on whether the government will take on Eskom’s secured debt or also a component of unsecured debt, Finance Minister Enoch Godongwana told reporters on Wednesday, saying all features were open to discussion.
The National Treasury said it had yet to consult with lenders and that the final debt plan would be developed in talks with them through the February budget.
A debt swap is the most likely maximum option, Kieran Curtis, head of emerging market local currency debt at Abrdn, told Reuters, adding that the announcement is positive for bondholders.
“The explanation for why they don’t know how much they’re going to earn is that they still don’t know precisely how many (bondholders) will settle for this,” he said.
“This will have to be done through willing vendors. (The government) will need it to be classified as a distressed exchange or look like a restructuring in some way.
(Reporting via Rachel Savage and Alexander Winning, editing via Marc Jones, Kirsten Donovan)