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Eskom is the ‘one risk to watch’ as SA veers towards junk status

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Cape Town - Eskom “will remain the one risk to watch with its increasingly monopolistic mind-set”, Nomura research into South Africa’s risks for 2017 reveals.

“S&P could still downgrade (South Africa) to junk mid-year, particularly depending on the situation at Eskom, which we expect to show further deterioration in credit metrics when including nuclear and its wider monopolistic mind-set,” Nomura emerging market economist Peter Montalto explained in a report on Friday.

Other reasons why Eskom will be a risk includes its “push back on paying renewable feed in tariffs, March deadline for guarantee framework renewal, nuclear procurement process moving forwards and tariff compression concerns depending on court judgements to come”.

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