The Land Bank has failed to stave off financial ruin after defaulting on debt that was due on Thursday. The default has now triggered cross default on certain other bonds — a clause that puts a borrower in default if they fail to honour their other debt obligations.
But funders of the agricultural bank are offering to help the state-owned lender recover from the loan default, Bloomberg reported later on Friday. However, they need an indication from government on how much support it is willing to give.
The state-owned Industrial Development Corp. of South Africa, which provides funding to agr0-processing as well as other manufacturing industries, has said it is willing to work with the Land Bank.
Futuregrowth Asset Management Ltd., which manages about R194 billion, including Land Bank debt, said it is also prepared to aid the cash-strapped lender.
“There’s understanding that something needs to be done,” said Jones Gondo, a credit analyst at Nedbank Group Ltd.
“But the proposal and direction for funders/creditors to consider needs to come from Land Bank and the shareholder.”
The funding needs come as the government pledged a R500 billion package to shore up an economy devastated by the impact of measures to halt the spread of the coronavirus, Bloomberg reported. — Bloomberg.