Land Bank can't make interest payments in July

The Land Bank says it will not be able to make interest payments due in the remainder of July, raising a risk of default despite the National Treasury recently announcing in the June adjustment budget that the state-owned lender will get a R3 billion equity injection.

In a statement issued on the JSE stock exchange news service, the Land Bank said it is still experiencing liquidity challenges and can confirm that it will not be in a position to proceed with the interest payments on listed notes that fall due between 09 July and 31 July 2020.

"Such failure to pay will, subject to the terms of the 2010 Programme, constitute an event of default," wrote the bank, which funds approximately 27% of agricultural debt in SA.

When Finance Minister, Tito Mboweni, announced on 24 June that the state will recapitalise the Land Bank, analysts were optimistic that this would help the bank avoid imminent defaults on its short-term debt. But the bank did say that the recapitalisation was going to be used to provide comfort to lenders that it will be able to service its repayment of liquidity facility that the bank has been trying to raise since June.