Allan Gray warns of SOE uncertainties | Fin24
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Allan Gray warns of SOE uncertainties

Sep 01 2016 17:58

Cape Town - South Africa's privately-owned Allan Gray investment managers said on Thursday that ongoing uncertainty at state-owned firms could impact investment decisions.

"We hope that the current uncertainties and governance concerns will soon be resolved and this will likely impact our views on the attractiveness of SOE (state-owned enterprises) debt as an investment for our clients," Andrew Lapping, chief investment officer of the firm with about R500bn ($34bn) assets under management, told Reuters.

Futuregrowth, which manages client assets of around $12bn, said on Wednesday it would no longer lend to six state-owned firms, citing political turmoil in the face of the investigation on Finance Minister Pravin Gordhan.

After Futuregrowth said it would stop granting loans pending a review of the decision, the rand dropped to the weakest level in more than seven weeks and South African bonds also fell.

Futuregrowth and the asset management industry are substantial funders to Eskom, Transnet, the South African National Roads Agency, the Landbank, the Industrial Development Corporation and the Development Bank of Southern Africa via direct loans as well as capital and money market instruments.

Denmark’s Jyske Bank AS became the second money manager to say it won’t lend to Eskom.

“We pulled the plug on Eskom too yesterday,” Rune Hejrskov, senior money manager at the Silkeborg, Denmark-based company said Thursday in e-mailed comments.

“I could easily see more lenders follow suit. We see issues on lending going forward and more governance issues.”
Hejrskov, who helps manage about $1.3bn at Jyske Bank, said he moved to being underweight in power company Eskom’s bonds from medium-weight.

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