Rand swings to gains as investors assess Eskom’s full-year loss

South Africa’s rand swung to gains and benchmark government bonds narrowed declines after Eskom reported a full-year loss of R20.7 billion ($1.5 billion).

Read: Eskom’s R20.7bn blowout strains SA’s finances

The rand advanced 0.1% to 14.15 per dollar, after being as much as 0.5% weaker earlier, while yields on 2026 government notes traded at 8.32%. Yields on Eskom’s dollar bonds due February 2025 fell three basis points to 6.26%.

Read: Foreigners sell rand assets at record pace as Eskom woes mount

The power company supplies about 95% of South Africa’s electricity and relies on government handouts to remain solvent. The utility’s precarious financial state has now become a national problem, with the government pledging a R128 billion bailout over the next three fiscal years to keep it operating.

Additional support for Eskom would likely come at the price of the country’s last remaining investment-grade rating with Moody’s Investors Service as it would widen the fiscal deficit and increase the debt burden.

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Source: moneyweb.co.za