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Credit rating actions by Moody’s
NEDBANK LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1951/000009/06
JSE share code: NBKP
ISIN: ZAE000043667
(“Nedbank” or “the bank”))
NEDBANK LIMITED - CREDIT RATING ACTIONS BY MOODY’S
In terms of Section 4.25 of the JSE Debt listing requirements, notice is given to
holders of Nedbank’s JSE listed bonds issued in terms of the bank’s Domestic
Medium Term Note Programme and Structured Note Programme, that on 10
November 2014 Moody’s downgraded the long-term deposit and senior debt ratings
of the five largest South African banks, including Nedbank Limited, by one notch to
Baa2 (stable outlook) from Baa1 (on review for downgrade). The rating changes for
Nedbank Limited are provided at the end of this notice.
In view of the correlation between sovereign and bank credit risk, the banks' ratings
are constrained by the rating of the South African (SA) government. Moody’s rating
actions were as a result, primarily driven by the weakening of the SA government's
credit profile, as captured by Moody's downgrade of South Africa's bond rating to
Baa2 (stable outlook) from Baa1 (negative outlook) on 6 November 2014, combined
with the banks' sizable holdings of sovereign debt securities, which links the bank’s
creditworthiness to that of the SA government.
The stable outlook on the deposit ratings mainly reflects the stable outlook on the
sovereign rating and the rating agency's views that the banks' lower Baa2 rating
level appropriately captures the pressures from economic headwinds, particularly in
light of the banks' capital buffers. Specifically, Moody's considers that the reduction
in Nedbank's NPL ratio to 2,8% in June 2014 from 3,5% in June 2013, and the
increase in the overall provisioning coverage of NPLs to 66% in June 2014, from
59% in June 2013, better positions the bank for the current economic slowdown,
supporting its stable outlook.
The following ratings were confirmed:
- BFSR of C-, although the equivalent baseline credit assessment (BCA) was
lowered to baa2 from baa1.
- Local and foreign-currency short-term deposit rating of P-2.
- National-scale short-term deposit rating of P-1.za.
- Both the BFSR and long-term global scale ratings have a stable outlook.
The specific rating changes for Nedbank Limited are as follows:
Nedbank Limited:
- Local and foreign-currency long-term deposit ratings downgraded to Baa2 (stable
outlook).
- National-scale long-term deposit rating downgraded to A1.za (stable outlook).
- Provisional foreign-currency senior unsecured EMTN programme downgraded to
(P)Baa2.
- National-scale senior unsecured rating downgraded to A1.za (stable outlook).
- Provisional foreign-currency legacy subordinated EMTN programme rating
downgraded to (P)Baa3, as well as any issued foreign-currency legacy
subordinated debt.
- National-scale legacy subordinated debt rating downgraded to A2.za
- Hybrid Tier 1 rating downgraded to Baa1.za(hyb).
For further information please contact:
Alfred Visagie (Executive Head: Investor Relations),
Tel: +27 (0)11 295 6249, email: alfredv@nedbank.co.za
Penny Himlok (Investor Relations Consultant)
Tel: +27 (0)11 295 6549, email: pennyh@nedbank.co.za
Mike Davis (Executive Head: Group ALCO)
Tel: +27 (0)11 295 7282, email: mikedav@nedbank.co.za
Sandton
11 November 2014
Sponsors to Nedbank Limited:
Investec Bank Limited
Nedbank Capital
Date: 11/11/2014 04:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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