Eskom bond oversubscribed

Eskom chief
Brian Dames
Johannesburg, South Africa — ESI-AFRICA.COM — 20 January 2011 – South African national power utility Eskom has revealed that its 10-year, US$1.75 billion international bond launched this week with a 5.75% coupon was more than two-and-a-half times oversubscribed.

The state-owned electricity company has been under pressure for several years to raise money to build new power stations, after the near-collapse of the grid in 2008 that hit Africa’s biggest economy hard.

“The proceeds will be used to fund our committed capital expansion programme, and so help to keep the lights on for all South Africans,” chief executive Brian Dames said in a statement.

The bond is Eskom’s first dollar-denominated issue. It floated a 500 million euro 7-year bond in 2006 that is now yielding 4.051%.

Dames described the 5.75% coupon as ‘extremely attractive’, and within a cost-of-funding target set by the industry’s regulator.