CAPE TOWN - The Land and Agricultural Development Bank of South Africa (Land Bank) warned holders of R50 billion of its debt that it had defaulted on a debt payment, and that it is trying to negotiate a payment waiver.
The Bank said in a JSE regulatory notice that there was a potential default for note holders holding the Land Bank’s JSE-listed R20 Billion DMTN 2010 Programme, and its R30 Billion DMTN 2017 Programme dated.
“The Issuer failed to make a payment when due to a lender under the terms of a revolving credit facility.The Issuer failed to make a payment when due to a lender under the terms of a revolving credit facility. The non-payment of this amount constitutes an event of default under the Affected RCF. The amount involved constitutes Material Indebtedness,” the bank said.
“The Issuer is engaged in discussions with the lender under the Affected RCF and is seeking a waiver,” the bank said,
The Bank cited as the only reason for the default, that it was experiencing a liquidity shortfall and was engaging with various stakeholders to address this challenge, especially in regard to financial obligations falling due, “which may need to be deferred.”
In unaudited results for the half-year to end-September, it incurred a R168.6 million loss, and its net interest margin fell from 2.8 percent to 2.4 percent while the percent of non-performing loans, versus the total increased to 9.9 percent from 5.4 percent.
Land Bank management blamed shifting in seasons that caused late harvests, fluctuations in agriculture product prices, and disease outbreaks for the increase in in-performing loans, at the time.
News of the default follows credit rating’s agency Moody’s downgrading the Land Bank twice this year.
On January 21 Moody’s reduced its rating to Ba1 from Baa3/P-3 and its long-term rating to Aa3.za from Aa1.za, reflecting what Moody’s described as the bank’s “ongoing fiscal challenges.”