Africa

Talks around restructuring Eskom Holdings SOC Ltd.’s bonds must be approached carefully to avoid spooking the market, according to S&P Global Ratings, Bloomberg News reported. Public Enterprises Minister Pravin Gordhan said on Thursday the government will consult with the power utility’s debt holders on any reorganization and that there isn’t any real concern about haircuts.

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Eskom Holdings SOC Ltd.’s power system “remains tight and vulnerable” going into South Africa’s summer because of increased maintenance, Bloomberg News reported. As the state-owned utility schedules more work to improve its aging fleet, it’s also experiencing more vandalism of its equipment and illegal connections, Chief Operating Officer Jan Oberholzer told journalists in Johannesburg on Wednesday. Eskom has managed to run for 164 straight days without implementing rotational power cuts, Oberholzer said.

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The South African government may be forced to inject more money into state power firm Eskom by the end of March if the struggling utility fails to meet its borrowing plan, a Treasury official told parliament on Wednesday, Reuters reported. Eskom supplies more than 90% of South Africa’s electricity but does not generate sufficient cash to meet its debt-service costs and relies on state bailouts to stay afloat.

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Zambia should show that it is taking measures to fight corruption to unlock donor aid and investments that have been withheld due to graft concerns, the British High Commissioner to the country said on Tuesday, the International New York Times reported on a Reuters story. Britain, Finland, Ireland and Sweden withheld nearly $34 million in aid to Zambia's social welfare and education sectors in September last year because of concern over financial mismanagement.

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Mozambique plans to conclude restructuring its dollar bonds by the end of September, almost three years after first announcing the proposal, Bloomberg News reported. The southeast African nation asked holders of $727 million of debt due 2023 to exchange it for $900 million of notes maturing five years later. That’s mainly because the government expects it will have started earning revenue from Africa’s largest liquefied-natural-gas project, and won’t have difficulty in repaying debts.

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A senior market analyst is challenging Cell C’s largest shareholder, Blue Label Telecoms, to provide financial evidence that SA’s third largest mobile operator is solvent, ITWeb reported. David Shapiro, deputy chairman of Sasfin Securities, says it’s disturbing that shareholders in the mobile operator have chosen silence instead of explaining the future of the company to the markets. SA’s third-largest mobile operator was yesterday downgraded by ratings agency S&P Global Ratings to “default” status, after Cell C failed to make interest payments in July.

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South Africa’s third-largest wireless carrier, Cell C Pty Ltd, had its credit rating cut to D by rating agency S&P Global after it failed to make interest payments due in July, Bloomberg News reported. There is “an increased likelihood that Cell C will be unable to repay all or substantially all of the obligations as they come due, unless it is able to restructure its debt and recapitalize its balance sheet,” S&P said in a statement on Thursday.

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Mozambique’s talks with the International Monetary Fund (IMF) are making “encouraging progress,” as the country seeks to restore access to international financing, President Filipe Nyusi said on Wednesday, Reuters reported. Mozambique has been battling to recover from a debt crisis after admitting in 2016 to $1.4 billion (£1.15 billion) of previously undisclosed lending, prompting the IMF to cut off support and triggering a currency collapse and debt default.

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Zambia’s central bank kept its key interest rate unchanged to boost economic growth, while warning that it could tighten policy if inflation doesn’t return to target, Bloomberg News reported. The Bank of Zambia held the rate at 10.25%, Governor Denny Kalyalya told reporters Wednesday in the capital, Lusaka. That’s after the Monetary Policy Committee bucked the global trend in May by tightening by 50 basis points as inflation was accelerating.

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An acceleration in economic growth in South Africa could trigger power cuts, with state utility Eskom Holdings SOC Ltd.’s fragile generation system unable to respond to increased demand for electricity, Bloomberg News reported. The energy availability of Eskom’s generation fleet is supposed to be as high as 80%, but is currently as low as 69%, and even a 0.1% rise in gross domestic product could result in outages, Nelisiwe Magubane, an Eskom board member, said at an event organized by research company Afriforesight in Johannesburg on Wednesday.

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