Moody’s confirms African Bank’s Caa2 global scale deposit ratings; negative outlook

Johannesburg, South Africa (capital Markets in Africa) — Moody’s Investors Service has today confirmed African Bank Limited’s Caa2 global scale long-term deposit and senior unsecured ratings, and the Caa2.za national scale issuer ratings. The global scale ratings continue to capture the implied losses of 10% that SARB’s restructuring plan will impose on both senior debt and wholesale deposits. Today’s rating action concludes the review for downgrade on African Bank’s ratings, initiated on 12 August 2014. The Not Prime short-term deposit ratings were not subject to the review.

The negative outlook on the bank’s deposit and senior debt ratings captures the implementation risks of the restructuring plan for the bank, in conjunction with the risk of heavier-than-anticipated losses that depositors and bondholders could incur, especially if there were delays in the implementation of the plan.

As part of the same rating action Moody’s has affirmed the provisional (P) rating on its European Medium-Term Note (EMTN) subordinated debt programme at (P)C. This rating level already captures the losses Moody’s expects for subordinated debt holders under the restructuring plan.

Separately, Moody’s notes that African Bank Investments Limited (unrated), African Bank’s holding company parent, is subject to parallel rescue proceedings, as per the public announcement made on the 5th of June 2015, that do not affect the restructuring of African Bank Limited or its ratings.