JOHANNESBURG, June 10 (Reuters) - Ratings agency Moody’s has downgraded South Africa’s Land Bank deeper into subinvestment grade after the state company missed another debt interest payment due to liquidity challenges.
The Land and Agricultural Development Bank of South Africa (Land Bank), the country’s largest agricultural-focussed lender, defaulted on the loans totalling 50 billion rand ($3.01 billion in April.
And in a notice on the Johannesburg Stock Exchange on June 1 Land Banki said it was not in a position to meet interest payments of nearly 120 million rand.
Moody’s cut Land Bank long-term issuer ratings by two notches to B3 from B1, six rungs into subinvesment, and changed the outlook to negative, citing the missed debt payments.
“(The) rating actions reflect the combination of longer than anticipated delays in rectifying the events of default triggered by the bank’s failure to make payments when due to its lenders,” Moody’s said late on Tuesday.
“The negative outlook reflects the high implementation risks of the restructuring plan.”
Moody’s had already downgraded the state firm in January, while Fitch has also warned of downgrades.
Around 5.7 billion rand of Land Bank’s debt is guaranteed by the government, and the National Treasury has said it cannot afford to recapitalise the bank as its fights the economic fallout of the COVID-19 pandemic.
A Land Bank spokeswoman told Reuters its chief executive was on “electronic roadshow” negotiating waivers and stand-still agreements with creditors, who have divided themselves in two groups led by Standard Bank and the Association for Savings and Investment South Africa.
$1 = 16.6109 rand Reporting by Mfuneko Toyana; Editing by Olivia Kumwenda-Mtambo and Louise Heavens