Economics
Eskom Bailout Risks S. Africa Moody's Rating, Reserve Bank Says
- Sustainability of state debt a risk to financial stability
- Government plans to split power utility into three units
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Bailouts for South Africa’s state-owned companies such as Eskom Holdings SOC Ltd. will weaken the nation’s fiscal position and put its last investment-grade credit rating at risk, the Reserve Bank said.
A downgrade by Moody’s Investors Service would leave South Africa without any investment-grade credit rating for the first time in 25 years. It would also see the country fall out of investment-grade debt gauges including the FTSE World Government Bond Index. This could trigger around $1.5 billion in forced outflows, the Reserve Bank said, citing International Monetary Fund estimates.