Rand wobbled by Moody’s warning over Eskom bailout

South Africa’s rand weakened on Thursday, dragged lower by a Moody’s report saying the government’s proposal to offer R59 billion ($4.25 billion) in additional support for cash-strapped power utility Eskom was credit negative.

Read: Moody’s says new Eskom support credit negative for SA

At 0850 GMT the rand was 0.4% weaker at 13.93 to the dollar, having opened the session 13.89.

Eskom, which supplies more than 90% of South Africa’s power but had to implement power cuts earlier this year, is grappling with high debt and has needed cash injections to stay afloat.

Finance minister Tito Mboweni presented an appropriation bill to parliament on Tuesday to give Eskom the extra cash, but warned at the same time of lower-than-expected tax revenues and higher public debt levels.

Read: Sarb gives, finance minister takes

In a worst-case scenario, Moody’s said it expected South Africa’s fiscal deficit could widen to 5.7% of gross domestic product in 2019, up from current projections of 5.2%.

Bonds also slipped, with the yield on the benchmark 10-year government issue up 4 basis points to 8.13%.