June 7, 2018 / 12:38 PM / in 2 months

UPDATE 1-South Africa's Eskom plans foreign bond sale, cuts capex

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JOHANNESBURG, June 7 (Reuters) - South African state power utility Eskom plans to sell foreign debt in around two months following an improvement in investor sentiment, its chief executive said on Thursday.

CEO Phakamani Hadebe, who was appointed permanently to the position in May, said that whereas investors and banks were not willing to lend to Eskom last year, they were now approaching their credit committees to seek approval for lending.

The struggling power firm is emerging from corporate scandals and governance issues as well as a string of interim CEO appointments stretching back to 2016.

“We are seeing an increase in appetite from investors. From July last year to January we couldn’t even sell 1 billion rand ($78 million) of debt, but the situation has changed dramatically,” Hadebe said at a briefing on Eskom’s operations.

“We plan a foreign issuance in around two months’ time.”

He said between 15 billion rand and 20 billion rand ($1.6 billion) of foreign borrowing is expected this financial year.

Eskom would reduce capital expenditure at the firm to 45 billion rand from 55 billion rand in the current financial year, he said.

Hadebe has been leading efforts to stabilise Eskom, a company at the heart of corruption scandals surrounding ousted president Jacob Zuma, as interim CEO since January after an intervention by then-Deputy President Cyril Ramaphosa.

Zuma has denied any wrongdoing.

Ramaphosa, who replaced Zuma in February, has made reforming state-owned firms a priority as he seeks to bolster economic growth and stave off sovereign credit ratings downgrades.

Eskom is regularly cited by ratings agencies as one of the main threats to the country’s creditworthiness. ($1 = 12.8031 rand) (Reporting by Alexander Winning Editing by James Macharia)

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