Eskom Holdings’s risk premium is dwindling as a turnaround at South Africa’s State-owned electricity company gathers momentum.
The extra yield investors demand to take on the risk of holding the utility’s dollar debt without the benefit of a government guarantee narrowed to the lowest on record following the publication of the utility’s results on Thursday. And the yield premium over comparable US Treasuries is also at the lowest since the Eskom securities were issued in 2018.
That’s despite the utility reporting a mammoth R55-billion annual loss for the year through March. It also revealed a fraudulent scheme that cost it billions in lost revenue, while arrears from delinquent municipalities continued to swell.
Instead, investors are focusing on Eskom’s prediction of a profit for this fiscal year, which would be the first since 2017.
Overall debt levels have also dropped as the company benefits from a government bailout, with loans being converted to equity as it meets
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