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South Africa Has a Sovereign Debt Problem. Its Name Is Eskom

  • Utility to receive $9.2-billion state bailout over three years
  • Yields rise as finance minister warns of risks posed by Eskom
Eskom's Kendal power station in Mpumalanga.
Eskom's Kendal power station in Mpumalanga.Photographer: Waldo Swiegers/Bloomberg
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A financial crisis confronting South Africa’s state power utility has become a national debt problem.

Finance Minister Tito Mboweni Tuesday unveiled a second multi-billion dollar bailout for Eskom Holdings SOC Ltd. within five months, aid that may force the cash-strapped government to increase borrowing and taxes. That could in turn trigger a credit-rating downgrade and massive outflow of funds, raise the cost of new debt and stymie efforts to revive the moribund economy.