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Moody’s Eskom debt inclusion raises SA downgrade risk

Moody’s has decided to include Eskom’s colossal debt load in the country’s overall fiscal-strength calculations.
Eskom's debt is approaching R500bn and is becoming a major threat to SA's economy. Picture: Moneyweb

The risk of South Africa losing its only investment-grade rating could increase now that Moody’s Investors Service has decided to include the state-owned power utility’s colossal debt load in the country’s overall fiscal-strength calculations.

Moody’s now includes Eskom’s government-guaranteed debt in its assessment of the nation’s fiscal situation because the utility can’t service its obligations without the state’s backing, it said in an emailed report Wednesday. The ratings company sees South Africa’s debt burden increasing to more than 70% of gross domestic product over the next few years, a trend that contrasts with Baa3-rated peers, which include Bahamas and Hungary, it said.

Read: SA’s debt surge must stop – Moody’s

Key insights

South Africa’s foreign debt is already rated junk by S&P Global Ratings and Fitch Ratings, and retaining the investment-grade assessment at Moody’s depends on how the government approaches the fiscal deficit and financial troubles of state-owned companies after the election
 
 
The embattled South African state power utility’s debt burden, described by Goldman Sachs as the biggest threat to the nation’s economy, is approaching R500 billion ($35 billion), according to data compiled by Bloomberg from public records, including bonds and issued loans, up from about R370 billion a year ago.
 
The Treasury’s worst-case scenario is for gross debt to deteriorate to 60.2% of GDP in the fiscal year ending February 2024; this doesn’t include Eskom’s debt.
 
© 2019 Bloomberg L.P

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Can anybody explain what the ANC government (Jacob Zuma era) did with the moneys entrusted with this amount of debt forced on the South African public???!!! It can never be repaid with the current level of economic growth!!!

…this “missing” corruption money forms part of the “wasteful & fruitless expenditure”, one hears about in reports.

Such wasteful & fruitless expenditure is easy to spot among the population: next time you see a person in a high-end BMW, Merc, Porsche, Jaquar or Landrover which obviously appears this owner doesn’t look intellectually capable of earning such income (and living in lavish property in a lifestyle estate, etc), then you know….there is the missing money which it manifests itself in.

The country’s money (much of it meant to uplift the poor) that was “lost” in state capture, can never be repaid by the connected elite, as it merged away into their lifestyles.

End of comments.

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