News Column

Senior unsecured bond sends Abil's shares higher

February 13, 2014

African Bank issued a senior unsecured bond worth 175 million Swiss francs (R2.14 billion) yesterday, which investors took as a sign of confidence in the ailing lender and sent its shares sharply higher.

The four-and-a-half-year bond, with a coupon of 5 percent is the fourth Swiss issue by the bank, commonly known as Abil, since July 2012 and brings to 555m Swiss francs the total amount raised so far.

Abil has struggled to recover loans in the past year as distressed borrowers failed to repay.

In November, it issued shares worth R5.5bn to strengthen its balance sheet.

"If Swiss investors are happy to lend them money at this coupon, that gives the local shareholders some comfort," said Greg Davies, equities trader at Cratos Capital.

Its shares rallied as much as 7 percent, and ended the day up 5.8 percent at R9.90.

The stock is down 18 percent so far this year, after losing about half its value last year.

The unsecured lender has also raised another $700m (R7.7bn) through the same London-listed $6bn euro medium term note programme, |said Gavin Jones, an executive for Abil's funding and liability management. - Reuters

Cape Argus

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Source: Cape Argus (South Africa)

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