As investors fret over Ramaphosa, Eskom bondholders worry most

Investors in Eskom are showing the deepest concern about the threat of Cyril Ramaphosa’s removal as president of South Africa.

That much is clear from the embattled company’s dollar-denominated bonds, which languish as some of the worst performing developing-nation debt so far this month. Eskom bonds maturing in 2025, 2027 and 2028 are all among December’s biggest laggards in the Bloomberg Emerging Markets Hard Currency Aggregate Index, which has 2 100 members.

Read: Bank stocks took a hammering from Phala Phala saga

In particular, yields on the state-run power utility’s 2025 notes have climbed on eight of the past nine days, surging 137 basis points. Those on similarly dated South African sovereign dollar bonds have also risen, but by a much more moderate 19 basis points.

The gap may point to idiosyncratic risk surrounding Eskom, according to Jones Gondo, a Johannesburg-based credit research analyst at Nedbank.

Read: Ramaphosa’s fight for survival roils SA debt markets

Ramaphosa’s political future was cast in doubt on November 30 when an advisory panel issued a scathing assessment of the president’s handling of the 2020 theft. After initially considering resigning, he is now contesting the report in court and has been given assurances by the governing African National Congress that its lawmakers will reject the findings when the matter is debated in parliament on December 13.

Read: Eskom extends Stage 6 load shedding till Friday

The ANC’s internal integrity committee has conducted its own probe into Ramaphosa’s conduct and the party’s National Executive Committee is due to consider its conclusions at a December 9 meeting. It’s unclear when the decision-making body will pronounce on them.

South Africa’s rand has pared its losses against the dollar since the advisory panel’s report to about 1%. The main stock index is also about 1% lower.