Eskom redeemed its R38 billion ES26 bond at maturity on 2 April 2026, marking the largest single debt repayment in the state utility’s history. The bond had served as a benchmark instrument in the domestic market for nearly two decades.
Why it matters: the successful redemption signals that Eskom’s financial turnaround is producing tangible results, reducing the risk premium on the utility’s remaining debt and easing pressure on South Africa’s sovereign guarantees.
History of the bond
The ES26 bond was first issued in March 2007 as a R500 million tranche with a coupon of 7.85%. Over 19 years it grew to approximately R38 billion through 30 public auctions. In total, 53 tranches of the bond were listed, reinforcing its role as a long-duration benchmark in South Africa’s bond market.
How it was funded
The redemption was supported by a combination of structured relief under the Debt Relief Act and Eskom’s improved financial performance. The utility reported a R16 billion net profit for the financial year ending March 2025, its first profit in eight years after a previous R55 billion loss.
What it means for borrowing costs
By honouring this large-scale commitment, Eskom is actively reducing its risk premium. Lower risk premiums mean lower interest rates on future borrowing, a critical factor as the utility refinances its remaining debt while funding the energy transition.
What happens next
Eskom’s financial recovery must be sustained alongside its operational gains, which include 315 consecutive days without load shedding. The next test will be whether the utility can manage upcoming bond maturities without further government support, a key signal for credit rating agencies watching South Africa’s fiscal position.