Africa

Investors are prepared for the worst as the day of reckoning looms for Eskom Holdings SOC Ltd., the state-owned power utility seen by Goldman Sachs Group Inc as the biggest threat to the country’s economy, Bloomberg News reported. Yields on benchmark South African government notes are at their highest in three weeks, trumped only by junk-rated Nigeria, Turkey and Lebanon among 29 major emerging markets. Rand-denominated sovereign debt has lost 3% for dollar investors this half, the worst performance after Colombia and Argentina.

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Angola is hoping sweeping economic reforms will smooth an ambitious plan to sell key state assets, including stakes in oil company Sonangol, a share of Puma Energy and more than 100 other enterprises. Africa’s second biggest oil exporter is in a rush for cash as it struggles to cope with moribund crude prices, slumping output and years of mismanagement that left Sonangol bloated and inefficient, Reuters reported. In August, the government published an extensive list of assets that will be offered to investors via public offerings, stake sales, asset sales or tenders.

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Eskom Holdings SOC Ltd., the state-owned South African utility that provides about 95% of the nation’s electricity, implemented power cuts on Wednesday amid maintenance problems, Bloomberg News reported. The rand weakened as investors fretted about the effect on economic growth. Power shortages have been a major constraint on output in Africa’s most industrialized economy. Protracted outages could cost the country its last investment-grade credit rating from Moody’s Investors Service, which is due to deliver its next assessment on Nov. 1.

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The trial against one of the alleged ringleaders behind $2 billion in fraudulent loans to Mozambique kicked off in New York on Tuesday, the same day citizens of the southern African nation cast judgment at the ballot box on whether their government had done enough to hold accountable officials involved in the secret deals, The Wall Street Journal reported. Mozambique, one of the world’s poorest countries, plunged into a debilitating crisis after the loans were disclosed in 2016, following reporting by The Wall Street Journal.

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South Africa has been promising for months to fix Eskom Holdings SOC Ltd., the state power utility that’s drowning in debt, made record losses and is reliant on government bailouts to remain solvent, Bloomberg News reported. While little tangible progress has been evident so far, several key decisions are due to be taken this month. The utility, which provides about 95% of the country’s power, has been without a permanent CEO since Phakamani Hadebe quit in July.

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Zambia’s Konkola Copper Mines (kCM) smelter was on Wednesday shut down for annual maintenance two days earlier than planned after a leak, the provisional liquidator Milingo Lungu said, Reuters reported. Lungu said the smelter, which was scheduled to undergo annual maintentance for 35 days starting on Friday, would now remain shut for 37 days until Nov 15 when output would resume. “There was a leak and hot copper touched water creating steam. We have therefore decided to shut down the smelter for annual maintenance two days ahead of schedule,” Lungu said.

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Renaissance Capital, which has correctly predicted eight out of nine sovereign rating decisions in emerging Europe and the Middle East since May, is calling a downgrade to junk for South Africa next month, Bloomberg News reported. That view is at odds with the majority in the Bloomberg survey, but Renaissance Global Chief Economist Charles Robertson says South Africa’s fundamentals have deteriorated significantly since May, when Moody’s Investors Service affirmed its Baa3 rating. The next review is on Nov. 1.

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KCB Group Plc is pursuing defaulters as Kenya’s biggest lender combines recently purchased National Bank of Kenya Ltd. into its operations, Bloomberg News reported. “You’ll see more actions, more demand letters going after our customers” who aren’t repaying loans, KCB Chief Executive Officer Joshua Oigara said on the sidelines of a conference in Nairobi last week. “Next year is the real recovery period for the loans we have for NBK.” The acquisition of state-owned NBK, which has 49% of its loans classified as non-performing, will almost double KCB’s ratio of bad debts to 12%.

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South Africa’s Tongaat Hulett, which has been battling to restore investors’ confidence after announcing in April it would have to restate prior financial reports, has postponed its results statement for the latest full year, it said on Monday, Reuters reported. Audited financial statements for the year to March 31 will not now be available by the previously anticipated date of Oct. 31, Tongaat said in a statement, adding that it will update shareholders on a new release date on Nov. 18.

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Ivorian banks saddled with unpaid debts of around $250 million by the bankruptcy of former top exporter SAF-Cacao are pleased with progress after the acquisition of its assets by Societe Agricole du Cafe-Cacao (SACC), sources at the banks said, Reuters reported. SAF-Cacao, formerly the largest cocoa exporter in southwestern Ivory Coast, was liquidated in mid-2018 after defaulting on debt in the wake of a disastrous 2016/17 season, when world cocoa prices fell 40%.

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