A second money manager has taken the decision to no longer lend to South African power utility, Eskom, with more lenders expected to follow.
Denmark’s Jyske Bank told Bloomberg that it has also ‘pulled the plug’ on Eskom, citing concerns over governance.
“We pulled the plug on Eskom too yesterday,” the group told Bloomberg.
“(We) could easily see more lenders follow suit. We see issues on lending going forward and more governance issues.”
On Wednesday, Futuregrowth Asset Management – South Africa’s largest private fixed-income money manager – said it would stop lending money to six state companies (including Eskom) because of governance and transparency concerns.
“We’ve observed recent reports that strongly hint of conflict between branches of South Africa’s government, the possible machinations of patronage networks and a seeming challenge to the National Treasury’s independence,” the group told Bloomberg.
“Any material risk to the state-owned entities’ governance, budgeting and approval processes for spending or lending must impact on our forward-looking credit assessments. It is difficult to make reasoned and defensible decisions to continue providing state-owned companies with additional funding using clients’ money.”
The company said it has suspended negotiations on over R1.8 billion debt finance to three different SOEs.
Futuregrowth manages over R170 billion worth of assets, while Jyske manages around R19 billion in assets.