(Updates prices, adds analyst quote, interview with finance
minister)
By Rachel Savage, Nellie Peyton and Bhargav Acharya
JOHANNESBURG, Feb 22 (Reuters) - South Africa's rand
strengthened against the U.S. dollar and dollar-denominated
bonds of Eskom rose, after the finance minister said in his 2023
budget speech that the government would take on more than half
of the state utility's debt.
At 1619 GMT, the rand traded at 18.1700 per dollar,
about 0.42% stronger than its previous close. Earlier in the day
before the budget speech, it had hit 18.38, its lowest since
November.
South African Finance Minister Enoch Godongwana said in his
budget speech to South Africa's parliament that the government
would take on 254 billion rand ($14 billion) of Eskom's
423-billion-rand debt, which he said was at risk of default.
However, Godongwana told Reuters in an interview that the
debt relief given to the utility is the last and there would be
no more bailouts in the future.
Eskom's dollar-denominated bonds reacted positively to the
news and rose as much as 2.47 cents in the dollar, with the two
non-government-guaranteed maturities benefiting the most.
"This budget should be a welcome surprise for the market,
which did not expect much detail with regards to Eskom
allocations," Deutsche Bank economist Danelee Masia said.
South Africa has been struggling for years to overhaul
Eskom, which is implementing the worst blackouts on record, is
plagued by corruption and mismanagement and has received 263.4
billion rand in government bailouts since 2008/09.
Hours of daily power cuts have crippled businesses in
Africa's most industrialised economy and weakened growth, which
Godongwana forecast would be 0.9% this year, down from a
previous forecast of 1.4%.
Meanwhile, Andre Botha, a senior dealer at TreasuryONE
said whether the debt relief would be enough remained to be
seen.
"While it is encouraging that the government wants to
take over some of Eskom's debt... Whether this is enough to
relief some of the Eskom load remains to be seen," he said.
On the Johannesburg Stock Exchange, the broader
all-share index closed down 0.81%, while the top-40
index ended 0.87% lower.
The government's benchmark domestic 2030 bond strengthened after having fallen earlier in the day, with the
yield down 10 basis points to 10.155%.
($1 = 18.1671 rand)
(Reporting by Nellie Peyton, Rachel Savage and Bhargav Acharya;
Editing by John Stonestreet, Savio D'Souza and Shounak Dasgupta)
