Barclays Africa plans to issue less debt in 2016
by Renee Bonorchis,
2016-03-18 09:22:25.0
BARCLAYS Africa Group plans to issue less debt in 2016 as lending growth slows and the company’s parent considers ways of reducing its stake in SA’s third-largest bank.
"It’s too uncertain for us to go to the market right now," Barclays Africa treasurer Mike Harvey said. "We’re going to hold back on issuance."
The lender, which relies on debt capital markets for less than 10% of its funding, is paring back on issuance as SA’s economy hovers near a recession and after average yields on rand-denominated government bonds jumped by more than 140 basis points over the past year. Barclays Plc, which holds 62.3% of the South African bank, said on March 1 it would reduce its stake to 20% or less in the next two to three years.
"We don’t need to raise debt funding right now," Mr Harvey said. "Maybe we’ll go back to the market in the second or third quarter. Our funding plan is to issue slightly less this year because we expect balance sheet growth to reduce."
Without the implied support of its parent, ratings companies Standard & Poor’s and Fitch Ratings this month downgraded Barclays Africa’s national credit status, bringing it into line with its South African peers. Even so, the South African bank, which had operations in 12 countries on the continent, did not expect the pricing of its bonds to change, Mr Harvey said.
"We’re 100% self-funded and there’s no reliance on Barclays Plc," he said. "We never saw any ratings benefit and our pricing has always been in line with our peers."
Bloomberg
Barclays. Picture: AFP PHOTO/NIKLAS HALLEN
BARCLAYS Africa Group plans to issue less debt in 2016 as lending growth slows and the company’s parent considers ways of reducing its stake in SA’s third-largest bank.
"It’s too uncertain for us to go to the market right now," Barclays Africa treasurer Mike Harvey said. "We’re going to hold back on issuance."
The lender, which relies on debt capital markets for less than 10% of its funding, is paring back on issuance as SA’s economy hovers near a recession and after average yields on rand-denominated government bonds jumped by more than 140 basis points over the past year. Barclays Plc, which holds 62.3% of the South African bank, said on March 1 it would reduce its stake to 20% or less in the next two to three years.
"We don’t need to raise debt funding right now," Mr Harvey said. "Maybe we’ll go back to the market in the second or third quarter. Our funding plan is to issue slightly less this year because we expect balance sheet growth to reduce."
Without the implied support of its parent, ratings companies Standard & Poor’s and Fitch Ratings this month downgraded Barclays Africa’s national credit status, bringing it into line with its South African peers. Even so, the South African bank, which had operations in 12 countries on the continent, did not expect the pricing of its bonds to change, Mr Harvey said.
"We’re 100% self-funded and there’s no reliance on Barclays Plc," he said. "We never saw any ratings benefit and our pricing has always been in line with our peers."
Bloomberg
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