Eskom Holdings’ bonds, rated deep junk, are the gift that keeps on giving. The securities yield more than the government’s debt, yet are backed by a guarantee that kicks in before a default is even on the horizon. The yield premium on Eskom’s rand bonds has tightened this year, even though the company has a stand-alone credit score nine steps below investment grade at Fitch Ratings and a debt pile of R450-billion. That’s because they still offer a pickup of more than 100 basis points and are, in effect, as safe as the sovereign’s.
