Eskom Plans to Sell More Than $1 Billion Bonds Abroad This Year

Eskom SOC Holdings Ltd., the South African power utility that’s building the world’s third- and fourth-biggest coal-fired plants, will sell more than $1 billion of bonds this year, Chief Executive Officer Brian Dames said.

“We will this year approach the markets to continue our fund-raising,” Dames said in an interview at the World Economic Forum for Africa in Cape Town. “It all depends on our capital expenditures. We haven’t drawn as aggressively. This year we will be going to the markets to raise some additional debt, just over $1 billion.”

The utility is spending 500 billion rand ($55.5 billion) through 2017 replacing old equipment and expanding capacity to avert a repeat of rolling blackouts that halted operations of companies including Anglo American Plc for five days in January 2008. The power system is straining to meet the economy’s needs, with capacity exceeding demand by razor-thin margins after the company deferred upkeep on some aging stations to the colder winter months because of higher unplanned outages in summer.

Eskom is selling 60 billion rand of debt in the five years through 2017 to help fund the expansion. South Africa’s energy regulator in February gave the utility permission to raise prices by an average 8 percent in each of the next five years, half the annual increase Eskom requested.

Yields on the company’s $1.75 billion of bonds due in January 2021 declined for the first time in three days, dropping 5 basis points, or 0.05 percentage point, to 3.88 percent by 11.45 a.m. in Johannesburg.

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