NewsSouthern AfricaSouth Africa in talks to roll over $695 mln of state airline debt

Thu,23Nov2017

Posted on Tuesday, 27 June 2017 13:05

South Africa in talks to roll over $695 mln of state airline debt

By Reuters

People queue at the SAA ticket counter desk at OR Tambo International airport in Johannesburg, South Africa, April 26, 2017. Photo: Themba Hadebe/AP/SIPASouth Africa's Treasury is in talks with banks to roll over 545.52 million pounds in debt due to be paid this month by struggling state airline South African Airways (SAA), a senior official said on Tuesday.

 

SAA, which is reliant on government debt guarantees of almost 20 billion rand, has been cited as a threat to South Africa's economy by rating agencies that have recently downgraded the country's sovereign rating to "junk".

If SAA fails to meet its debt obligations, it may have ripple effects on the government's wider guarantee framework, Treasury Director General Dondo Mogajane told legislators.

"So we understand the urgency and importance of acting carefully and in a very responsible way, so we are seized with the matter," Mogajane said in response to questions during a presentation by state-owned SAA to parliament.

Threat to South Africa's economy

SAA's chief financial officer, Phumeza Nhantsi, told journalists that around 9 billion rand of debt was maturing in a few days time, with around 6 or 7 lenders involved.

She did not name any of the lenders due to confidentiality clauses, but confirmed that they were looking to the Public Investment Corporation, Africa's largest pension fund, as a possible lender in future.

According to the opposition Democratic Alliance (DA), Standard Chartered Bank has declined to renew its loan facilities of 2.3 billion rand to SAA due on June 30.

ABSA and Standard Bank are among other lenders, the DA says.

 



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