African Bank Investments Limited says it will repay investors when a 150 million-rand ($14.3m) bond matures tomorrow, after record losses fanned speculation South Africa’s largest unsecured lender may need to raise funds.

African Bank issued the one-year floating-rate note at the three-month Johannesburg Interbank Agreed Rate plus 90 basis points last July. Moody’s Investors Service cut the lender’s foreign rating to Ba1 in May, one step below investment grade, after it reported a record first-half loss.

Bloomberg News reported that the repayment is “consistent with our practice of settling bonds upon maturity,” Nithia Nalliah, chief financial officer of Johannesburg-based bank known as Abil, said in an e-mailed response to questions yesterday.

The lender’s capital requirements have declined as its business has shrunk, said Bruce Stewart, head of debt origination at Nedbank Capital in Johannesburg.

“In the normal course of business, you would expect Abil to replace the bond or issue new debt,” Stewart said by phone today. “If Abil can calm the troubled waters, it will be in a reasonable position next year and then it won’t be a problem at all to roll the debt.”

African Bank shares fell 1.2 per cent to 6.72 rand as of 4:23 p.m. in Johannesburg, bringing this year’s decline to 44 per cent, the second-worst performance on the benchmark FTSE/JSE Africa All Share Index of 164 companies.

Source: Punch
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