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Steinhoff shares down 18% on news that ECB sold its bonds

Jan 09 2018 16:02
Jan Cronje

Update: At 16:40, Steinhoff shares were trading at R7.50 a share, down 13.3% on the day.

Cape Town - Shares of embattled Stellenbosch-headquartered retailer Steinhoff were trading down about 18% on Tuesday afternoon, after news broke on Monday that the European Central Bank (ECB) had sold its Steinhoff bonds. 

A ECB spokesperson confirmed the sale of the bonds to Fin24. 

“As regards the timing, we can tell you that the sale transaction and settlement took place last week, which is why the bonds no longer appeared in the weekly list of corporate bond holdings that the ECB publishes,” read the statement. 

The ECB did not say who bought the bonds, or what price it sold them for.  The bonds have lost about half their value in the wake of the accounting scandal at Steinhoff, that came to light in early December.  

Steinhoff [JSE:SHN] shares were trading at R7.07 at 14:15 on Tuesday.  

This is about 80% weaker than they were on December 5, the day before the group's CEO Markus Jooste resigned amid an accounting scandal. 

Bryan Stewart, a trading specialist at EasyEquities, said the ECB bond sale had likely been triggered by Moody’s downgrading the Steinhoff bonds towards the end of December.

“The ECB will have specific investment guidelines to adhere to when investing in corporate bonds. Moody’s has placed the company on review for a further downgrade citing liquidity concerns,” he said. 

“Today (Tuesday) we have seen the market react with Steinhoff down by 18% as more concerns were raised on the group's near-term liquidity,” said Stewart at 13:30. 

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