97 billion
12 February 2009
Government recognises Eskom's critical role in the economy and the
importance of the company maintaining a solid investment grade credit rating
and remains committed to ensuring Eskom's financial stability.
Government has approved guarantees totalling R175,97 billion over five
years, in support of Eskom's capital expansion programme. Included in this
amount is the existing debt issued under Eskom's Domestic Medium Term Note
(DMTN) programme: the ES26 (Eskom 2026, 7,85 percent, maturing 2 April 2026),
the ES33 (Eskom 2033, 7,5 percent, maturing 15 September 2033) bonds and the
two Floating Rate Notes (maturing 2026 and 2033). The remainder of the
guarantees will be to support the issuance of new debt both locally and
internationally.
The guarantees are in addition to the R60 billion subordinated loan in
support of Eskom's capital expansion programme that has already been approved.
The Eskom Subordinated Loan Special Appropriation Act provides for a multi-year
appropriation as follows: R10 billion in 2008/09, R30 billion in 2009/10 and
R20 billion in 2010/2011.
Eskom has already established sizeable issuances in the bonds and notes
issued under the DMTN programme. The bonds issued under the DMTN programme form
part of the All Bond Index (ALBI) (ES33 2,64 percent; ES26 1,58 percent), which
in addition to the size of the issuances creates liquidity in the secondary
market. Guaranteeing the ES26 and ES33 allow Eskom to utilise the existing DMTN
programme to continue raising funds.
Government rights will be subordinated to those of other un-guaranteed and
commercial creditors. This commitment by government has broader positive
implications in that it results in an overall credit enhancement, which, in
addition to the existing security against some of the existing international
and domestic issuances, benefits un-guaranteed lenders.
If required, government would either repay the debt in its entirety or step
into the shoes of Eskom and continue to make payments on Eskom's behalf.
An annual limit, determined by Eskom's cash flow requirements, will be set
on the debt that Eskom can issue each year under the guarantees.
Contact persons:
Ms Ayanda Shezi
Department of Public Enterprises
Tel: 012 431 1111
E-mail: ayanda.shezi@dpe.gov.za
Thoraya Pandy
National Treasury
Tel: 012 315 5944
Mr Fani Zulu
Eskom Holdings (Pty) Ltd
Tel: 011 800 2265
Issued by: Minister of Public Enterprises, Minister of Finance and
Eskom
12 February 2009
Source: Department of Public Enterprises (http://www.dpe.gov.za)
