(Bloomberg) --
South Africa's central bank will temporarily stop accepting The Land & Agricultural Development Bank securities as collateral in its repurchase operations after the state-owned lender defaulted on its debt.
The bank, which provides about 30% of loans in the agriculture industry, failed to make repayments on a revolving credit facility, triggering a cross-default event on a 50 billion-rand ($2.7 billion) bond program last month.
“In light of recent developments surrounding the Land Bank, including the downgrade of the Land Bank credit rating and the subsequent debt default, the South African Reserve Bank has taken a decision to temporarily suspend Land Bank bills as eligible collateral in its repo operations,” the central bank said in an emailed statement. The suspension will take effect May 13, it said.
The Land Bank is seeking a one-year deferral of all interest and capital payments falling due in the next six months so that it has enough liquidity to keep operating as it develops a business plan and negotiates the restructuring of its debt.
©2020 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
