South Africa’s Eskom Slashes Debt by a Fifth; Bonds Rally

(Bloomberg) -- Eskom Holdings SOC Ltd., the beleaguered South African state power utility, reduced its debt by almost a fifth after repaying matured loans and benefiting from a more favorable exchange rate, Public Enterprises Minister Pravin Gordhan said.

Debt fell to 401 billion rand ($29 billion) at the end of March, from 488 billion rand a year earlier, Gordhan said in an online briefing to lawmakers on Tuesday.

The yield on Eskom U.S. dollar bonds that mature in 2025 fell 20 basis points by 11:09 a.m. in Johannesburg, the biggest drop since April 14, according to Bloomberg pricing.

Eskom hasn’t been generating enough electricity to meet the nation’s needs, resulting in intermittent power shortages, and isn’t generating enough cash to cover it operating expenses and interest bill, leaving it dependent on government bailouts to survive.

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