South African mining firms might turn to bank loans for financing this year because the bond market was too expensive,
"I don't think the bond market is a great place to fish for financing at the moment," Holland said. "The yield curve has changed, the spreads have increased. The syndicated markets are probably better."
Emerging market debt has been rocked this year by a sell-off triggered by US tapering of monetary stimulus, with South African bonds the worst performers among 26 indices tracked by the
Mining companies have also been buffeted by falling metal prices and labour unrest, with at least 70 000 platinum mineworkers on strike for the past three weeks.
The average premium investors demand to hold dollar debt of emerging market metals and mining companies over US treasuries has increased 30 basis points this year,
Gold was fixed at
Lenders, meanwhile, are keen to provide funds.
"Banks are open for business,"
"There should be an uptick in activity this year. There's plenty of demand to lend to well-run companies with good projects."
African borrowers raised
The amount of money mining companies raised through loans globally increased by 6.6 percent to
The spread between
It has been talking to banks about extending the maturities of some loans as a matter of prudence since at least November last year. About 35 percent of the company's
"Current sentiment is that bond yields will rise so there's an expectation that coupon rates should be higher,"
To be sure, mining companies are able to sell bonds in rand to South African investors, according to
In December Sibanye Gold, which houses the three established South African operations spun off from
This includes a term loan at 2.75 percentage points above Jibar and a revolving credit facility that is 2.85 percentage points above the rate.
"There is good capacity in the bank debt markets for quality risk," Holland said. "I think they are getting more averse to higher-risk operations and certainly we still provide a very good credit counterparty for the banks."
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