By Tasneem Bulbulia.
Photo Credit: Waldo Swiegers.
State-owned Eskom has announced the successful redemption of its ES26 bond, a decisive milestone in the utility’s journey toward financial independence.
First issued in March 2007 as a R500-million tranche at a coupon of 7.85%, the ES26 bond grew to an outstanding amount of about R38-billion over its 19-year tenure, reflecting strong and sustained investor support, Eskom says in a statement.
“The redemption of the ES26 bond is a testament to the utility’s turnaround trajectory and our commitment to rigorous financial governance. This achievement is a result of the structured support provided under the Debt Relief Act, integrated with our significantly improved year-on-year financial performance.
“By adhering to these debt relief conditions, we are fostering a more predictable and stable investment environment. This fiscal discipline is a critical lever for sustainability and it ensures that Eskom can continue to honour its obligations without placing an unsustainable burden on the government,” says Eskom group CE Dan Marokane.
The growth of the ES26 bond was achieved through 30 public auctions, which collectively raised about R9-billion.
The remaining balance was raised through reverse enquiries and liability management issuance, which Eskom says demonstrates flexible execution and continued investor appetite for its debt instruments.
In total, 53 tranches of the ES26 bond were listed, reinforcing its role as a long-duration benchmark instrument in the domestic bond market, the utility avers. This was formally recognised in 2007 when the bond received the JSE Spire Award for Best Bond Issue.
“By honouring this large-scale commitment, Eskom is actively reducing its risk premium, which lowers the interest rates the utility pays on future borrowing,” the utility states.