There is a \u201cclear danger\u201d that South Africa\u2019s state-owned power utility, Eskom Holdings, could default on its debt, S&P Global Ratings said.<\/p>\n
\u201cWe are very concerned about liquidity issues,\u201d Konrad Reuss, the managing director of S&P for sub-Saharan Africa, said at an event in Johannesburg Thursday.<\/p>\n
Eskom is the biggest recipient of state guarantees at a time when domestic power demand is the lowest in more than 10 years and as South Africa\u2019s finances buckle under lower tax revenue and rising debt.<\/p>\n
The company needs R20 billion ($1.6 billion) of funding by the end of its fiscal year on March 31, the Mail & Guardian newspaper reported last week, citing the utility.<\/p>\n
Yields on Eskom\u2019s bonds climbed after the comments, with the rate on dollar debt due in January 2021 rising 54 basis points to 6.37%, the highest since Nov. 14, at 1:29 p.m. in Johannesburg.<\/p>\n
Finance Minister Malusi Gigaba on Tuesday said Eskom\u2019s state keeps him awake and is his \u201cbiggest worry.\u201d He spoke before meeting some of the utility\u2019s lenders on the same day to address the utility\u2019s financial problems.<\/p>\n
Goldman Sachs Group in September said that Eskom was the biggest single risk to the South African economy and that the government needed to replace its management.<\/p>\n