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CAPE TOWN, May 20 (Reuters) - South Africa’s Land Bank told lawmakers on Wednesday it was negotiating with a consortium of lenders to try to restructure its debt facilities after it defaulted on 50 billion rand ($2.7 billion) of loans in April. The Land and Agricultural Development Bank of South Africa (Land Bank), the country’s largest agricultural-focussed lender, was downgraded by Moody’s in January and last month missed loans repayments, leading to defaults on its credit facilities and sparking fears about its ability to stay afloat.
Around 5.7 billion rand of its debt is guaranteed by the government, and the National Treasury has said it cannot afford to recapitalise the bank as its fights the economic fallout of the coronavirus pandemic.
Land Bank Chairman Arthur Moloto told parliament the state-owned lender had every intention of honouring its financial obligations to service interest on its debt, which it has struggled to do due what it called “liquidity constraints”.
“We are at this stage engaging with a consortium of bond lenders, composed of commercial banks and institutional investors. The negotiations are at a very sensitive stage,” Moloto said.
“We are at this stage engaging with them with a view of restructuring the debt facilities,” he said.
$1 = 18.2282 rand Reporting by Wendell Roelf, writing by Mfuneko Toyana; editing by Jason Neely and Mark Potter