Abil shares extend slump

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African Bank logo .

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



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