Johannesburg, South Africa — ESI-AFRICA.COM — 11 January 2011 – South African power utility Eskom Holdings Limited is meeting with investors this week to discuss the sale of dollar-denominated bonds, as it seeks to boost funding needed to remedy a shortage of generating capacity.
Barclays Capital, Bank of America Merrill Lynch and JPMorgan Chase & Co. have been appointed to manage the sale of the “benchmark” dollar bond, according to a statement sent to Bloomberg News by Eskom. South Africa’s state-run power utility plans to start meeting with investors in the United States, the United Kingdom and Europe from today, according to the statement.
“We are going to speak to investors and gauge demand for the bond,” Eskom spokeswoman Hilary Joffe said in a phone interview from here. “We are hoping it will be well received. This is part of our general funding programme.”
Eskom “’ which supplies 95% of South Africa’s electricity “’ faces a projected R190 billion funding shortfall until March 2017 as it develops power plants to avoid a repeat of outages that shut mines and factories for five days in 2008. CEO Brian Dames said in October that the utility planned to raise “significant” funds from debt markets this year to help meet its funding needs.
“The size of Eskom’s bond issue will be determined during discussions with investors, which are expected to last about a week,” said Joffe.
Eskom last sold international bonds in March 2006 when it issued US$646 million of 4% bonds, according to data compiled by Bloomberg. The yield on the securities closed at 3.36% in Johannesburg yesterday, a decline of 146 basis points since the start of last year, Bloomberg data shows.
The bonds are rated BBB+ by Standard & Poor’s “’ the firm’s third-lowest investment grade ranking.