South African corporate borrowing is being driven through expansion into
Standard Bank South Africa has seen steady growth in the corporate market despite the contraction in
"We've had a good start to the year in terms of the South African corporate activity, with a number of large deals coming to play, such as the Woolworths acquisition of
"The bulk of the borrowing we're seeing is coming from large domestic corporates and leveraged buyout companies looking to lower their overall cost of funding by refinancing existing facilities. Additional borrowing is coming from those companies looking to borrow money domestically to expand operations in the rest of
"If you have a bond in issue you can't always settle the outstanding debt as you need to see out the terms agreed upon when issuing the instrument," says
"In that sense, the bank loan market offers more flexibility in terms of adjusting your repayment terms or schedule."
The number of loans taken out by domestic corporates has grown significantly in recent years.
One challenge for banks in this market is competition, he says.
"All the domestic banks are very well-capitalised at the moment so there's a fairly big pot of money chasing a relatively small pool of deals. That means the competition for deals has resulted in favourable pricing on a number of deals that have closed in 2014."
OCTOBER 31, 2014
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