The land Bank raised R1.5 billion in a bond auction this week. David Ritchie/African News Agency (ANA)

JOHANNESBURG – The weak economy and uncertainty over the government’s controversial plans to expropriate land without compensation did not stop the Land Bank from raising R1.5 billion in a bond auction this week.

The agricultural development bank described the successful raising of the funds on Monday as an indicator of growing confidence the investor community had in the financier. 

The bank said it received bids in excess of R2.1bn, which helped to secure listed debt financing at relatively better rates compared with six months ago. The R1.5bn was spread across three different bonds, including a three- and five-year floating rate note and a five-year fixed rate note, it said.

It attributed the continued positive feedback to the adoption of a Board of Directors Code of Ethics and Business Conduct; release of regular announcements to enhance transparency and raise investor confidence and regular investor roadshows and bond auctions, among other initiatives.

It said the completion of an Ethics Opportunity and Risk Assessment also helped to grow its development portion of the loan book by 12 percent to R5.5bn for the year to end March, from R4.9bn last year.

Chief financial officer Bennie van Rooy said the bank had consistently demonstrated its ability to create value for its shareholders and deliver on its mandate, despite persistent challenges in the external environment.

“Over the past few years, the team has diligently worked to strengthen the bank’s institutional, structural and funding positions in order to accelerate the pace of transformation in the sector,” said Van Rooy. “We are pleased with the result of the auction and will continue to work determinedly to grow investor sentiment in the Land Bank.”

The bank said while the investor community would be following policy developments with regards to land reform closely, the outcome of this week’s listed debt auction was a demonstration of their continued confidence in its ability to support the agricultural sector as a whole.

Last month, the bank warned during its annual results to end March that land expropriation without compensation could have grim consequences for its financial stability.

Land Bank chairperson Mabotha Moloto said if poorly executed land expropriation could have grim consequences for the bank as a creditor.

During the period under review, the bank disbursed R1.55bn to transformational projects, R334 million in drought relief loans to affected farmers and R74m in interest rate subsidies to new-generation farmers.