Top business stories

2016-09-08 06:00

LAST week saw the biggest investor sell-off of South African bonds and equities since “Nenegate” in December 2015.

The short-lived appointment of Des Van Rooyen as Finance Minister towards the end of last year resulted in a sell-off of bonds and equities to the value of R8bn.

Last week’s sell-off totalled R10.2bn and has been attributed to market uncertainties around the Hawks investigation involving the current Minister of Finance, Pravin Gordhan.

Embattled state owned power utility, Eskom, faces new financing challenges as two major funding institutions announced that they would not offer new loans or roll over existing debt for South African state owned enterprises (SOE’s). Local and overseas funding institutions cite an increased risk of investment status downgrade as the reason for their decisions.

Eskom not only faces increased cost of borrowings, but has a $2bn (R29bn) funding gap to finance expansion and operations.

Another troubled SOE, South African Airways, is still treading water pending confirmation of a R5bn guarantee facility from the SA Treasury. International routes are now under threat as foreign destinations require financial statements from all operators.

SAA cannot satisfy the going concern criteria in its financials without the Treasury guarantee.

Gordhan has made it clear that no guarantee will be issued until the state carrier appoints a new board of directors.

- Business Reporter.

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