South Africa. Key Union Tells Eskom’s Top Bondholder to Sell Its Holdings
The labor union whose members contribute most to the funds overseen by South Africa’s state pension manager wants the institution to stop investing in the debt of Eskom Holdings SOC Ltd., potentially increasing funding pressure on the heavily indebted utility.
The 240,000-strong Public Servants Association said by buying Eskom’s bonds the Public Investment Corp. is exposing pensioners to excessive risk as the state-owned power company is not selling enough electricity to cover its costs and has had to be bailed out by the government. It also urged the PIC to avoid investing in other struggling state-owned companies such as South African Airways.
The Government Employees Pension Fund, managed by the PIC, holds 54.8 billion rand ($3.7 billion) of Eskom bonds, or 16.8% of all the debt outstanding, more than five times the next-biggest holder, according to data compiled by Bloomberg. The PIC owns an additional 8.5 billion rand of Eskom bonds on behalf of other clients.
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