South Africa’s public debt could rise as high as 95% of gross domestic product by 2024 if the government doesn’t restructure the state-run utility Eskom and implement a workable growth plan, the Institute of International Finance said in report, Reuters reported. The report, released late on Wednesday, echoes a warning on Tuesday by the central bank about ballooning government debt, which has doubled from less than 30% of GDP before the 2008 global financial crisis to nearly 60%. The 95% estimate is the worst of four outlooks the IIF report laid out.
Eskom Holdings SOC Ltd.’s stand-alone credit profile was downgraded one notch at Fitch Ratings, signaling the South African power utility’s deteriorating ability to repay debt without additional government support, Bloomberg News reported. Weakening revenue growth, profit-margin compression because of lower tariff increases, and higher primary energy costs were cited by Fitch as among the reasons for the reduction. Eskom’s poor liquidity and high debt levels are the worst among its peers, which includes Namibia Power Corp., Fitch said in a statement on Monday.
A fleet of supercars said to have been seized by the Swiss authorities in a money-laundering investigation from the son of the leader of Equatorial Guinea was auctioned on Sunday in Switzerland, the International New York Times reported. The vehicles were among 25 luxury cars sold for more than $27 million at Bonhams auction house, according to The Associated Press, in what Bonhams called a “very special sale.” Beforehand, the cars had been estimated to bring in more than 12 million euros, or $13 million.
Kenya’s loss-making Mumias Sugar Company has been placed under receivership to protect its assets and maintain its operations, local lender KCB Group said on Tuesday, Reuters reported. “The Bank has appointed Mr. PVR Rao (Tact Consultancy Services) as the sugar company’s receiver manager,” KCB said in a statement, giving no more details. Mumias, which used to be the East African nation’s leading producer at more than 250,000 tonnes a year, has been beset by poor management and mounting losses in recent years.
Kenya Airways must avoid picking a board packed with politically-connected individuals after it is renationalized in order to ensure future success, its chairman said on Tuesday. The loss-making airline, which is 48.9% government-owned and 7.8% held by Air France-KLM, was privatized 23 years ago but sank into debt and losses in 2014, Reuters reported. Lawmakers voted to re-nationalize it in July. Chairman Michael Joseph said the requirement for professionals to be put in charge of the airline is being built into draft laws that will guide the renationalization.
Eskom Holdings SOC Ltd., the state-owned South African power utility with about $30 billion of debt, sought advisers on how to implement a government bailout seven months after President Cyril Ramaphosa said the company would be reorganized, Bloomberg News reported. Eskom issued an invitation to tender for “financial services for implementation for government support package” on Aug. 23, according to a document seen by Bloomberg. The tender, which closed on Sept.
Investors may be forgiven for wondering what’s taking Moody’s Investors Service so long to downgrade South Africa to junk, Bloomberg News reported. Financial markets have been pricing in a downgrade for months, and the two other major rating companies have had South Africa on junk for two years. Yet Moody’s said this week South Africa’s investment rating is probably safe for another 12 to 18 months and President Cyril Ramaphosa’s government needs time to implement economic reforms, including fixing the loss-making power utility Eskom Holdings SOC Ltd.
South Africa’s unsecured lending boom has left 40% of borrowers in default and millions of people in a debt trap, according to fund manager Differential Capital, Bloomberg News reported. About 7.8 million of the country’s 60 million residents have taken out a combined 225 billion rand ($15 billion) of loans without collateral, mostly for short-term needs such as furniture and urgent family care, the Johannesburg-based firm said in a report. South Africa eased controls on unsecured lending in 2007 to boost financial inclusion in one of the world’s most unequal nations.
Creditors holding 99.5% of Mozambique’s Eurobond support its debt restructuring proposal, the country’s government said in a statement on Monday, paving the way for an overhaul of part of its heavy debt burden, Reuters reported. Mozambique said in May it had agreed a restructuring deal “in principle” with the majority of holders of the $727 million notes maturing in 2023 MZ139100352= after a hidden debt scandal in 2016 prompted the International Monetary Fund and foreign donors to cut off support, triggering a currency collapse and a default on the country’s sovereign debt.
South Africa’s struggling state-owned defense company Denelaims to begin disposing of equity stakes and exiting loss-making businesses within months as part of its turnaround strategy, it told a parliamentary committee, Reuters reported. Denel, which makes ammunition, missiles and armored vehicles for South Africa and customers elsewhere in Africa, the Gulf and Europe, received a 1.8 billion rand ($122 million) cash injection from the government at the end of last month after struggling to pay salaries and suppliers.