Abil shares extend slump

Comment on this story

Johannesburg - Shares of South African unsecured lender African Bank Investments extend losses after credit agency Moody's last week cut its rating on the bank's international bonds to below investment grade, or “junk” status.

Shares of Abil, as the bank is known, drop 3.6 percent to 8.10 rand, adding to a 6.8 percent drop on Friday.

Last week Moody's cut its rating on Abil's global senior debt by one notch to “Ba1/Not Prime” citing the “deterioration” of the bank's asset quality.

Abil has been hammered as its target market of low-income borrowers have been squeezed by inflation, high levels of indebtedness and unemployment, forcing many to default on payments.

Investors also worry it may need another capital raising to shore up its balance sheet.

It raised 5.5 billion rand through a rights offer last year.

However, chief executive Leon Kirkinis has said the downgrade would not dramatically affect funding costs.

Abil's bonds have also been squeezed, with the yield on a Swiss franc-denominated senior bond maturing in 2018 jumping by a record 239 basis points since the downgrade. - Reuters

sign up

Comment Guidelines

  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

  5. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. You are only required to verify your email address once to have full access to commenting on articles. For more information please read our comment guidelines