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BILB-Credit Rating Adjustment
The Land and Agricultural Development Bank of South Africa
(JSE Code: BILB)
(“the Land Bank”)
Land and Agricultural Development Bank of South Africa: Moody’s downgrades Land
Bank’s issuer rating to Ba2; outlook negative
The Board of the Land and Agricultural Development Bank of South Africa (Land Bank) notes with
disappointment today’s (31 March 2020) announcement by Moody's Investors Service, ("Moody's”) of
the downgrade of the country’s Development Finance Institutions (DFIs), including Land Bank.
Land Bank’s Corporate Family Rating (CFR) and Issuer Ratings have been downgraded from Ba1 to
Ba2, whilst maintaining a negative outlook. Moody’s has further downgraded Land Bank’s Credit
Assessment (BCA) from B1 to B2.
The Board notes that Moody’s has affirmed the Bank’s National Scale Ratings with the Long-term
Issuer Rating at Aa3.za. The Bank therefore remains a high grade investment issuer relative to local
issuers.
Moody’s announcement today comes as a consequence of the downgrade of the Government of South
Africa's long-term foreign-currency and local-currency issuer ratings from Baa3 to Ba1.
This development could not have come at a worse time when the world and the nation are grappling
with the negative effects of the COVID-19 pandemic on all spheres of our lives.
Moody’s has pointed out that the downgrade of the issuers’ BCA reflects its “expectations of rising
industry risks, and the Bank’s increasing focus on higher-risk segments and clients, in response to the
development mandate and amidst on-going macro-economic challenges”.
The Bank acknowledges the challenging operating conditions facing the agricultural sector in which, as
a specialist Development Finance Institution, its business is concentrated. The downgrade has been
largely occasioned by extraneous environmental and industry risks.
The Bank’s business and operational fundamentals remain strong, and further measures have been
adopted to manage the Bank’s financial sustainability and credit worthiness. In the last number of
months particular improvement measures have been implemented, including the following:
• The Bank’s risk appetite and its post investments and monitoring programme have been
prudently tightened as part of its lending and investment programme – and continues to be
supported through specialist expertise in the sector;
• Support has been obtained from the shareholder with a government guarantee to enhance
the Bank’s fund raising programme;
• The filling of key executive management positions has progressed significantly with the
permanent appointments of the Chief Financial Officer and the Chief Executive Officer
effective beginning of February and March 2020, respectively.
• The review of the long term strategic path for the Bank is at an advanced stage.
The Board remains confident of the Bank’s prospect beyond the current economic conditions, the
industry challenges and the impact of the COVID-19 pandemic.
The Rating Announcement is available on its website, www.moodys.com.
1 April 2020
Enquiries
Land and Agricultural Development Bank of South Africa
Ayanda Kanana, Chief Executive Officer
Khensani Mukhari, Chief Financial Officer
Rebecca Phalatse, General Manager: Marketing and Communications – Tel: 074 159 6833
Date: 01-04-2020 09:14:00
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