Bloomberg reports that according to the Government Employees Pension Fund (GEPF), which is the biggest investor in Eskom debt, there are significant hurdles to a proposal that its bonds be converted to equity to help rescue the struggling power utility.

The initiative, which has been backed by the country’s biggest trade unions, was first examined by the Public Investment Corporation (PIC), which manages most of the pension fund’s investments, but according to the GEPF’s investment chief, the pension fund has not been formally approached about a potential swap. Sifiso Sibiya said on Tuesday that if it was approached, then “members interests would be borne in mind and put first in terms of expecting returns and not negatively affecting investment outcomes”. Swapping debt for equity was a complicated proposition, he said, because it would also require the R2.09-trillion fund to rebalance its holdings across asset classes to comply with its allocation rules. With R82bn of Eskom bonds, the GEPF holds about a fifth of Eskom’s debt. The GEPF remained concerned about the performance of state-owned companies, Sibiya said, and had not increased its exposure to Eskom. “Currently around 90-odd percent of our Eskom debt is government guaranteed and we would wish for that to remain in place,” he indicated. In addition to the debt-for-equity swap, other proposals that have been considered include the government taking over half of Eskom’s debt.

• Read the full original of the report in the above regard by Antony Sguazzin at BusinessLive

Get other news reports at the SA Labour News home page