MTN: 8,739 -121 (-1.37%)
South Africa's rand regains ground; Eskom bonds fall
(Recasts, adds details)
JOHANNESBURG, July 29 (Reuters) - South Africa's rand
bounced back from a four-week low against the dollar on Monday,
but pessimism around Eskom remained as the struggling power
group failed to dispel investor worries with the appointment of
an interim chief executive.
Dollar-denominated bonds issued by the cash-strapped
state-owned utility extended falls following an announcement by
the government that chairman Jabu Mabuza will act as chief
executive officer until a new CEO is found.
Rating agencies Fitch and Moody's last week both warned
about fiscal pressure on South Africa and highlighted Eskom as a
major risk, piling pressure on the currency.
Monday's announcement means Eskom is still seeking a
permanent replacement for Phakamani Hadebe, who in May said he
would step down as CEO after the "unimaginable demands" of the
job affected his health.
Eskom's 2025 bond issue fell to its lowest
level in one month, data from Tradeweb showed on Monday.
At 1637 GMT, the rand was up 0.7% on the day at
14.2050 per dollar.
Statistics South Africa will release second-quarter
unemployment figures on Tuesday, and the revenue service will
publish June trade balance numbers on Wednesday.
"Focus will now turn back to the U.S. Federal Reserve's
interest rate announcement due on Wednesday, while the release
of local employment figures and trade balance data this week may
further add to the rand's volatility," Bianca Botes, a Treasury
partner at Peregrine Treasury Solutions, said in a note.
In fixed income, the yield on the benchmark government bond
due in 2026 dipped to 8.315%.
Stocks closed stronger with the All-share index up
0.81% to 58,035 points, while the Top-40 index gained
0.88% to 51,977 points.
Leading the Blue-Chip was insurer Discovery which
rose 3.24% to 133.70 rand, while South Africa's biggest insurer
Sanlam climbed 3.70% to 75.32 rand, each rebounding
from falls last week.
" has recovered. What I think affected Discovery
and insurers last week was commentary around the National Health
Insurance (NHI) bill, and that had a big part to play in why it
was so negative," said Ryan Woods, a portfolio manager at
The government NHI bill, which seeks to centralise
healthcare financing, will minimise the role of private
Mobile operator MTN also rose 3% to 109.98 rand
after its Nigerian subsidiary was granted a full super agent
licence, allowing the firm to convert its existing airtime
agents and recruit other small businesses to distribute
financial services there.
"The market is reacting to something positive in that
space," Woods said.
(Reporting by Alistair Smout and Onke Ngcuka
Editing by Andrew Heavens)
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