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Kwanalu

The voice of agriculture . Die stem van landbou . Izwe lezokulima

Agri SA neem met kommer kennis van Moody’s se afgradering van Land Bank en Eskom | Agri SA notes with concern Moody’s downgrade to the Land Bank and Eskom

English to follow:

27 November 2020

Moody’s Investors Service se verlaging van die Land Bank en Eskom se onderskeie graderings hou ‘n risiko in vir voedselsekerheid en die herstel van die ekonomie as geheel. Wat die Land Bank betref, is Moody’s van mening dat die verdere afgradering die resultaat is van voortdurende vertragings in die finalisering van die bank se herstruktureringsplan en verwante laste en ekwiteitsoplossings, waar laasgenoemde ‘n voorvereiste is vir regstelling van die bank se wanbetalings. Sodanige vertragings verhoog die risiko dat daar nie op ‘n oplossing tussen die Land Bank en die regering ooreengekom sal word nie. Dit kan potensieel aanleiding gee tot grootskaalse verliese vir die finansierders.

Met verwysing na Eskom, was die afgradering genoodsaak weens ‘n kombinasie van die instelling se onvolhoubare kapitaalstrukture en deurlopende finansieringsbehoeftes, tesame met ‘n hoë waarskynlikheid van herstrukturering van skuld. Beide aksies bevestig die dringendheid van spoedige en doeltreffende maatreëls deur die regering om die uitdagings by die SOE’s aan te spreek. As ons ag slaan op Moody’s se rasionaal, hou die vertragings in herstruktureringsplanne en verwante laste- en ekwiteitsoplossings ‘n risiko in vir verdere skuldeiserverliese. Dit kan soveel as 95% beloop.

Agri SA doen ‘n beroep op die Nasionale Tesourie om spoedig die instelling te kapasiteer ten einde sy lewensvatbaarheid te verseker en ook voedselsekerheid te beskerm. Dit beteken dat die bank se likwiditeitsprobleme aangespreek moet word om dit op die pad na volhoubaarheid te plaas. Die Land Bank is te belangrik om te misluk en alle nodige pogings moet aangewend word om te verseker dat dit ‘n lopende saak bly.

Dit is ook ewe belangrik om kragvoorsiening te verseker. Daarom pleit ons vir voortgesette ondersteuning vir Eskom. ‘n Volhoubare en operasioneel gesonde kragvoorsiener hou geweldige voordele in vir die landbousektor, asook vir die ekonomie as geheel.

Die effektiewe en tydige implementering van beleide en planne om die Land Bank sowel as Eskom om te draai, bly ‘n groot bron van kommer vir graderingsagentskappe. Solank hierdie kritieke aspekte nie behoorlik deur die beheer- en bestuurstrukture van hierdie instellings in samewerking met die regering aangespreek word nie, sal die geloofwaardigheidsuitdaging bly bestaan. ‘n Gebrek aan geloofwaardigheid sal noodwendig lei tot verdere likiditeitsuitdagings wat Suid-Afrika nie kan bekostig nie.

Navrae:

Christo van der Rheede

Agri SA Uitvoerende Direkteur

Kulani Siweya

Agri SA Landbou-ekonoom

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The action by Moody’s Investors Service to lower the Land Bank and Eskom’s respective ratings pose a risk for food security and overall economic recovery. Moody’s is of the opinion that the further downgrade is a result of the on-going delays in implementing Land Bank’s restructuring plan and related liability and equity solutions. The latter is a necessary pre-requisite to allow the bank to prevent further defaults. Such delays increase the risk that a liability solution between the Land Bank and government will not be agreed on. This will result in financial losses for lenders.

With Eskom however, action was warranted owing to the combination of the institution’s unsustainable capital structure and continuing financing needs, coupled with a high probability of debt reorganisation. Both actions further reinforce the need for government to speedily and effectively implement measures that will see the challenges at SOE’s being resolved. Taking a cue from Moody’s rationale, the delays in restructuring plans and related liability and equity solutions pose a risk of further creditor losses by as much as 95%.

Agri SA calls on National Treasury to swiftly capacitate the institution to preserve its viability and subsequently protect food security. This entails resolving the banks liquidity issues and ensuring that the bank is set on a sustainable strategic and operational trajectory. The Land Bank is too an important institution to fail and all necessary efforts need to be taken to ensure it remains a going concern.

Equally important is to secure power supply. To this effect, we further call for continued support of Eskom. A sustainable and operationally sound power utility holds tremendous benefits for the agricultural sector and the overall economy.

The effective and timeous implementation of policies and plans to turn around both the Land Bank and Eskom, remains a big concern to rating agencies. For as long as these critical aspects are not addressed properly by the governance and management structures of these institutions in collaboration with government, the credibility challenge will remain. A lack of credibility will inevitably result in further liquidity challenges that South Africa can ill-afford.

Enquiries:

Christo van der Rheede

Agri SA Executive Director

Kulani Siweya

Agri SA Agricultural economist