20110121
BuaNews

Pretoria — Public Enterprises Minister Malusi Gigaba says Eskom's bond oversubscription is a sign of investor confidence in South Africa.

"The oversubscription on the bond issuance demonstrates international investors' confidence in Eskom and the South African government," said the minister.

The oversubscription, said Eskom, follows a roadshow conducted by the parastatal in the US, UK and Europe. Eskom said the $1.75 billion bond was more than two and a half times oversubscribed. It's a 10-year international bond that may not be sold in South Africa.

Eskom CEO Brian Dames welcomed the news. "We welcome the confidence that international investors have shown in Eskom. The offer is an important part of our funding programme. The proceeds will be used to fund our committed capital expansion programme and so help to keep the lights on for all South Africans," he said.

"This is Eskom's first dollar bond issue and the pricing is extremely attractive for us. It has been facilitated by the government's strong support for Eskom and we are within the cost of funding target set by Eskom's regulators," he explained.

Minister Gigaba said government's support of Eskom has helped to lower the utility's risk profile and has provided the foundation for a return to Eskom being able to raise funding off its own balance sheet.

Last year, rating agency Moody said it viewed positively the government's plan to increase guarantees for Eskom debt to a total of R350 billion from R176 billion.

"We hope that this trend will persist as other state-owned enterprises approach the market to raise funds for their capital expansion programmes, as this will serve to reduce pressure on the fiscus," said the minister, adding that completion of the utility's build programme is critical for ensuring security of electricity supply.