The national scale rating was raised to zaBB from zaBB-. S&P said the bank’s capitalisation has improved, combined with better earnings than expected.
“The stable outlook balances the bank’s very strong capital levels and limited medium-term refinancing risks against the weak economic environment that could negatively impact its earnings and business stability, and the longer term risk that the bank’s funding is susceptible to investor confidence,” S&P said.
The main driver in the significant reduction in the balance sheet has been the systematic repurchase of portions of the bank’s Euro Medium Term Note programme (EMTN) bonds in issue, as announced on July 14, September 5 and September14, 2016, and certain additional but limited open market trades thereafter.
The total rand equivalent of all EMTN bond repurchases, together with the early settlement of certain rand bilateral funding arrangements, as at September 30, was R11.7 billion.
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The global scale rating also applies to the bank’s EMTN programme and all notes issued under the $6 billion (R79.78 billion) EMTN programme, which are listed either on the London Stock Exchange or the Swiss Securities Exchange.
The R25 billion Domestic Medium Term Note programme and all notes issued under that programme are not rated. African Bank intends to release its interim results for the six months to end March on May 23.