DA to oppose Eskom’s desperate move to access pensions
19 December 2020
Government had been spending more money than it received for more than a decade and instead of approaching the International Monetary Fund (IMF) for funding or pursuing sensible privatisation options that include strategic private sector equity partners it appears hell-bent on pressing ahead with a scheme which potentially opens our pension pot – larger than Germany’s– to risk.
Despite Eskom being “in a utility death spiral as well as a debt spiral” according to Olga Constantatos, head of credit at Futuregrowth Asset Management – a holder of Eskom debt – the Public Investment Corporation (PIC) has been approached by the National Treasury to convert about R95 billion of Eskom debt held by the PIC into equity.
Additional plans involve converting government-guaranteed debt into sovereign bonds. The bulk of Eskom's debt (R350 billion) is already guaranteed by South Africa's government and the swap could put Eskom into technical default.
The rating agency, Standard & Poor’s is on record as saying it would further lower Eskom’s rating should it undertake debt restructuring, which could be tantamount to a default.