Standard’s R1bn loan facility closure a ‘vote of confidence’ in banks
Standard Bank’s successful closure of a $1bn syndicated term loan facility, in which 43 global banks participated, demonstrates confidence in SA’s banks, analysts say.
Despite the political backdrop, sluggish economic conditions and ratings volatility, it was a strong vote of confidence in Standard Bank, said Conway Williams, head of listed credit at Futuregrowth Asset Management. "Further, it talks to the maturity and stability of SA’s financial markets."
His comments followed a Moody’s report that said that low economic growth would weaken domestic banks’ credit quality and profitability, but capital would remain resilient.
SA’s banks were extremely well capitalised, notwithstanding the country’s sovereign credit rating, making them attractive relative to their international counterparts, said Ryan van Breda and Farzana Bayat, portfolio managers at Prescient Investment Management.
Standard Bank was well respected by offshore investors, with its strategic partner, the Industrial and Commercial Bank of China, providing an additional level of comfort.
Local appetite for Standard Bank paper remained robust, as evidenced by oversubscription at auctions for both senior and subordinated offerings, said Williams.
The $1bn three-year term loan facility was heavily oversubscribed, necessitating the scaling back of total commitments, said Standard Bank. The facility would be used for "general corporate purposes", the bank said.
The size of the facility and oversubscription was testament to the market’s confidence in SA’s banking system, said David Kinsey, treasury and capital management head at the bank.
Utilisation of the facility would enable Standard Bank to continue supporting clients across sub-Saharan Africa.
FirstRand announced on Monday the launch of a $250m syndicated facility that Williams said was likely to garner similar support levels.
Also this week, Investec Bank Limited raised a $600m syndicated loan facility, attracting more than $700m in commitments from 30 lenders.