Please refer to the disclaimer at the end of this document. The annual results of the City of Johannesburg (CoJ) were substantially quali- fied. We therefore view the results as largely unreliable. Revenue totalling R5.2bn was either incorrect or unverifiable, while debtors of R2.8bn could not be verified. The underlying performance of the CoJ is weak; revenue collections are under pressure and 73.9% of the debtors book has been impaired. However, this may not lead to a downgrade; Moody’s has stated that an audit qualification might not have a direct impact on its rating of the CoJ. Credit metrics weakened in FY:10. The city’s debt burden remains high, while cash generation has fallen. However, the CoJ’s economy is large; if adequate controls are put in place, and its accounting and billings problems are remedied, we believe that the financial situation should improve. Securitisation issuance to remain high into August. Nitro is expected to return to market with a new transaction, aiming to raise up to R4bn. This follows the trend of July, with both Thewini 9 and Blue Granite 2 raising funds (although less than was on offer). Corporate issuance was robust, with Toyota, Growthpoint and RCS all return- ing to market. Sources: Standard Bank Research; Annual reports Figure 1: CoJ — Interest-bearing liabilities are high, while cash has declined FICC Research South Africa: Credit: Monthly Market Barometer July 2011 Research Strategists Janine Pein* [email protected]+27-11-3788154 Robyn Clements* [email protected]+27-11-3787222 Kuvasha Govender* [email protected]+27-11-3787217 City of Johannesburg — not a pretty picture - 3,000 6,000 9,000 12,000 FY:06 FY:07 FY:08 FY:09 FY:10 Rm Cash and cash equivalents Long term interest-bearing debt Short term interest-bearing debt
39
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Standard Bank Monthly Market Barometer - July 2011
Standard Bank's Monthly Market Barometer for July 2011, giving commentary of the state of financial management in the City of Joburg.
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Please refer to the disclaimer at the end of this document.
The annual results of the City of Johannesburg (CoJ) were substantially quali-
fied. We therefore view the results as largely unreliable. Revenue totalling R5.2bn
was either incorrect or unverifiable, while debtors of R2.8bn could not be verified. The
underlying performance of the CoJ is weak; revenue collections are under pressure
and 73.9% of the debtors book has been impaired. However, this may not lead to a
downgrade; Moody’s has stated that an audit qualification might not have a direct
impact on its rating of the CoJ.
Credit metrics weakened in FY:10. The city’s debt burden remains high, while cash
generation has fallen. However, the CoJ’s economy is large; if adequate controls are
put in place, and its accounting and billings problems are remedied, we believe that
the financial situation should improve.
Securitisation issuance to remain high into August. Nitro is expected to return to
market with a new transaction, aiming to raise up to R4bn. This follows the trend of
July, with both Thewini 9 and Blue Granite 2 raising funds (although less than was on
offer). Corporate issuance was robust, with Toyota, Growthpoint and RCS all return-
ing to market.
Sources: Standard Bank Research; Annual reports
Figure 1: CoJ — Interest-bearing liabilities are high, while cash has declined
FICC Research South Africa: Credit: Monthly Market Barometer
Table 2: Financial position and cash flows (as disclosed by the CoJ) — FY:10 highlights
5
Monthly Market Barometer — July 2011
Credit Research
Long-term interest-bearing debt grew by 16.6%, to R10.6bn (FY:09 – R9.1bn). This increase was primarily due to a R500m
10-year loan from the Development Bank of SA, and a R1bn loan granted by Nedbank, which falls due in 2018. We believe
that the funding from Nedbank replaces the redemption of the COJ01, which was redeemed on 13 April 2010. This resulted in
a considerable reduction in short-term liabilities, to R430m (FY:10) from R1.2bn (FY:09) (Figure 4). Therefore, the debt matur-
ity profile has lengthened. Credit metrics are weak, especially once the R5.2bn of unverifiable revenue is excluded: the inter-
est-bearing-debt-to-revenue ratio was 86.6% (FY:09 – 70.1%). The city has investments of R2bn (FY:09 – R3.5bn) which are
held as collateral until the liabilities are settled. The largest is a sinking fund of R1.5bn (FY:09 – R2bn) which is allocated to
the redemption of the CoJ bonds. However, this is fairly small in comparison to the R6.6bn (FY:09 – R7.6bn) of bonds out-
standing.
Cash on hand more than halved, declining by 54.2%, to R305m (FY:09 – R666m); the decrease was because R300m was
utilised to repay long-term liabilities. The city generated less cash, with cash from operations declining by 14.4%, to R3.2bn
(FY:10) from R3.8bn (FY:09). However, capex was less, at R4.6bn (FY:09 – R6.3bn) and therefore, free cash flow was less
negative, at -R1.4bn (FY:09 – -R2.5bn).
Ratings
The CoJ is rated Aa3 (Moody’s) and AA- (Fitch). Moody’s has commented that an audit qualification might not result in a
downgrade. Moody’s commented on the ratings in May, stating that the muni’s size, solid budgetary management and con-
trol, and “commitment to financial recovery” support the rating. The high gearing, liquidity challenges and substantial backlogs
in service delivery constrain the rating. The agency views the likelihood of extraordinary support from the SA government as
moderate. However, we believe that this is a fundamental driver behind the ratings. We do not believe that the city has exer-
cised good control — it has not managed its budgeting process well — as evidenced by an EBITDA loss. However, we do
agree that gearing is high and cash flow is under pressure. Despite these challenges and the substantial audit qualification,
we believe that this is unlikely to result in a downgrade. We view the rating as considerably supported by the agency’s
expectation of government support, if required.
Bond performance
The City of Johannesburg issued a new fixed-rate note, the COJ07 (2021, 10.78%) in March 2011, raising R850m, at a spread
of 195 bps over the R208. The credit spread on the bond has tightened by 5 bps over the past three months, to settle at R208
+ 190 bps. There were some moves in the CoJ bonds over the past year, the largest being the COJ06 (2015, 10.82%), which
tightened by 103 bps, to settle at R157 + 172 bps. The spreads on the COJ02 (2016, 11.9%) and the COJ05 (2023, 12.21%)
did not change over the past year. The COJ02 is currently trading at 250 bps over the R157, and the COJ05 is trading at R208
+ 230 bps.
Figure 4: Short-term liabilities have declined
Sources: Standard Bank Research; Annual results
-
3,000
6,000
9,000
12,000
FY:06 FY:07 FY:08 FY:09 FY:10
Rm
Cash and cash equivalents Long term interest-bearing debt Short term interest-bearing debt
6
Monthly Market Barometer — July 2011
Credit Research
The newly issued COJ07 traded 49 times, for R2.3m during its first three months in issue. The COJ04 traded 480 times for
R448m, and the COJ06 recorded 56 trades for R527m. Trading activity in the COJ03 and the COJ05 was smaller — the
COJ03 traded eight times for R43m, and the COJ05 traded 37 times for R54m.
Over 6-months, the COJ06 and COJ04 outperformed the ALBI and the equity indices; and the COJ02, COJ03 and COJ05
outperformed the ALBI and the FINI15 and TOP40 equity indices. However, over 12-months, the equity indices outperformed
all the bonds, and only the COJ03 was outperformed by the ALBI (Figure 5).
Concerns
We have many concerns regarding the city’s latest financial statements. The sizable qualification has rendered the annual
results largely unreliable. Although we have adjusted for the qualifications in our analysis, we believe that our results are an
approximation of the actual performance, at best. However, the adjustments do lead us to believe that the underlying perform-
ance of the CoJ is weak. Revenue collections are under pressure, while a significant portion of the debtors book has been
impaired for a great length of time. We believe that controls are inadequate, and we therefore do not place a great deal of reli-
ance on the numbers as reported.
The high debt levels and low cash generation are also sources of concern. The city must improve its revenue collections.
Given the size of the muni, we believe that with adequate controls in place, the financial situation would improve vastly. How-
ever, as these results are more than a year overdue, the possibility exists that these problems may be repeated in FY:11.
COJ05
COJ04
COJ02
COJ06
COJ03
FINDI30
FINI15TOP40
ALBI
-
2
4
7
9
8 14 19 25 30 3512-month return (%)
6-m
onth
ret
urn
(%)
Bonds Equities ALBI
Figure 5: Over the past 12 months, all the bonds underperformed in comparison to the equity indices
Sources: Standard Bank Research; Bloomberg
7
Monthly Market Barometer — July 2011
Credit Research
Credit issuance — July 2011
Securitisation issuance remained robust in July, with Thekwini 9 and Blue Granite 2 both raising funding. However, both issues
raised less than the total amount on offer. Nitro is following this trend, aiming to raise up to R4bn on 11 August. Corporate is-
suance picked-up, with several issuers raising funding, Toyota was the largest — issuing two new bonds and raising R760m.
Demand for bank paper remained strong — Standard Bank also raised R1.1bn by tapping two bonds.
Table 3: Issues in August and future credit issues
Issuer Date of issue Bonds Amount on offer Current/ previous auction details
SANRAL 3 August
African Bank 11 August We expect African Bank to issue 6-month CP; African Bank is aiming to raise up to R200m.
Nitro Securitisation 4 Issuer Trust (Nitro 4)
11 August 20 notes R4bn The issuer is aiming to raise up to R4bn across 20 notes with various tenors. The following notes will be on offer:
3-month A1 note is expected to raise R345m. Pric-ing has been set at 3M Jibar + 15 bps;
6-month A2 note is expected to raise R345m and price at 3M Jibar + 30 bps;
9-month A3 note is expected to raise R330m. Pric-ing has been set at 3M Jibar + 40 bps;
1-year A4 note is expected to raise R320m and price at 3M Jibar + 50 bps;
15-month A5 note is expected to raise R315m and price at 3M Jibar + 60 bps;
18-month A6 note is expected to raise R290m and price at 3M Jibar + 70 bps ;
21-month A7 note is expected to raise R270m and price at 3M Jibar + 80 bps;
2-year A8 note is expected to raise R197m and price at 3M Jibar + 90 bps;
27-month A9 note is expected to raise R177m and price at 3M Jibar + 95 bps;
30-month A10 note is expected to raise R165m and price at 3M Jibar + 100 bps ;
33-month A11 note is expected to raise R151m and price at 3M Jibar + 110 bps;
3-year A12 note is expected to raise R137m and price at 3M Jibar + 120 bps;
39-month A13 note is expected to raise R123m and price at 3M Jibar + 125 bps;
42-month A14 note is expected to raise R109m and price at 3M Jibar + 130 bps;
45-month A15 note is expected to raise R89m and price at 3M Jibar + 140 bps;
4-year A16 note is expected to raise R252m and at 3M Jibar + 145 bps;
4-year B note is expected to raise R174m and price at 3M Jibar + 205 bps;
4-year C note is expected to raise R60m and price at 3M Jibar + 320 bps;
4-year D note is expected to raise R65m and price at 3M Jibar + 420 bps; and
4-year E note is expected to raise R86m and price at 3M Jibar + 500 bps.
The pool comprises 37,756 South African auto loans, with an aggregate balance of R3.98bn. The weighted average seasoning of the loans is 19 months, and the weighted average loan balance outstanding is R154k. The transaction is supported by cash totaling R18m.
HWAY23 (2023)
NRA022 (2022, 12.25%)
NRA023 (2023)
NRA028 (2028, 12.25%)
Netcare 5 August We expect Netcare to issue 3-month CP; the issuer is aiming to raise up to R400m.
R300m Details on page 8
Sources: Standard Bank Research: SOE issuance calendar; issuer announcements
8
Monthly Market Barometer — July 2011
Credit Research
Issuer Date of issue Bond code Amount raised Details and commentary
Denel 4 July 3-month CP R590m The paper priced at 3M Jibar + 10 bps.
SANRAL 6 July HWAY23 (2023)
NRA022 (2022,12.25%)
NRA023 (2023)
NRA028 (2028,12.25%)
R300m The issue was allocated as follows:
The HWAY23 raised R105m and priced at R197 + 22 bps;
The NRA022 raised R82m and priced at 110 bps over the R208;
The NRA023 raised R3m and priced at 43 bps over the R197; and
The NRA028 raised R110m and priced at R186 + 113.5 bps.
Thekwini 9 6 July Six notes R1.6bn The issuer was aiming to raise up to R2bn. The issue was allocated as follows:
The THE9A1, rated Aa2/Aaa.za, raised R370m and priced at 121 bps over 3M Jibar; wider than the pricing guidance of 100 bps to 115 bps over 3M Jibar;
The THE9A2, rated Aa2/Aaa.za, raised R252m and priced at 3M Jibar + 135 bps; the top end of the pricing guidance;
The THE9A3, rated Aa2/Aaa.za, raised R816m. The note priced at 3M Jibar + 145 bps — the top end of the pricing guidance;
The THE9B, rated Baa2/A2.za, raised R69m and priced at 200 bps over 3M Jibar (the top end of the pricing guidance);
The THE9C, rated Ba3/Baa3.za, raised R73.5m. The note priced at 3M Jibar + 280 bps, wider than the pricing guidance of 210 bps to 240 bps over 3M Jibar; and
The unrated THE9D raised R19.5m and priced at 3M Jibar + 675 bps. Pricing guidance was set at 630 bps to 700 bps over 3M Jibar.
All the notes have 5-year tenors. The pool comprises 3,208 loans, with a total current portfolio balance of R1.8bn. The current weighted average LTV stands at 64.09% and the PTI ratio is 18.47%.
RCS Investment Holdings (Pty) Ltd
12 July RCSB02 (2013)
RCSB03 (2016)
R500m The issue comprised:
The RCSB02, which raised R200m and priced at 3M Jibar + 203 bps; and
The RCSB03, which raised R300m and priced at 370 bps over 3M Jibar.
Growthpoint 13 July GRT03 (2015) R500m The note priced at 145 bps over 3M Jibar.
Eskom 13 July ES23 (2023, 10%)
ES26 (2026, 7.85%)
R300m Demand was robust, with 10 bids totalling R660m:
The ES23 raised R200m, and priced at 57.5 bps over the R208. The note swapped out at approximately 70 bps over 3M Jibar; and
The ES26 raised R100m, and priced at R186 + 57.5 bps. The note swapped out at approximately 82 bps over 3M Jibar.
DBSA 14 July DV23 (2023, 10%) R421m The note priced at 91 bps over the R186. The auction received bids totalling R621m, with nine bids allocated in full.
Table 4: Previous credit issues and taps
Sources: Standard Bank Research; issuer announcements; JSE
9
Monthly Market Barometer — July 2011
Credit Research
Issuer Date of issue Bond code Amount raised Details and commentary
Real People In-vestments Hold-
19 July RPI01 (2016) R200m The CPI-linked note has a coupon of 5.25% and was privately placed.
TCTA 21 July WS04 (2016, 15.5%)
WSP2 (2017, 9%)
WSP5 (2021, 9%)
R935m Demand was robust, with bids of R1.4bn received. The switch was allocated as follows:
R435m (the issuer was aiming for R300m) was switched from the WS04 bonds into WSP2 bonds; and
R500m of the WS04 bonds were switched into WSP5 bonds.
The WSP2 swapped out at approximately 86 bps over 3M Jibar, and the WSP5 swapped out at approximately 3M Jibar + 71 bps.
Calgro M3 Devel-opment (Pty) Ltd
22 July CGR7 (2014)
CGR8 (2015)
R50m The issue comprised:
The CGR7 raised R22.5m and priced at 800 bps over 3M Jibar; and
The CGR8 raised R22.5m and priced at 3M Jibar + 1,000 bps.
Toyota 25 July TFS83 (2015)
TFS84 (2016, 8.7%)
R760m The issue received bids totalling R1.8bn, and was allo-cated as follows:
The floating-rate TFS83 raised R260m, and priced at 3M Jibar + 85 bps; and
The fixed-rate TFS84 raised R500m, and priced at R157 + 130 bps.
Transnet 26 July 6- and 12-month CP R200m Bids of R400m were received. The issue was allocated as follows:
R100m of 6-month paper, which priced at 4 bps over 6M Jibar; and
R100m of 12-month paper, which priced at 10 bps over 12M Jibar.
Standard Bank 26 and 27 July SBSi12 (2017)
SBS19 (2021, 10.18%)
R1.1bn The following notes were tapped:
The inflation-linked SBSi12 raised R650m, and priced at 70 bps over the R211; and
The fixed-rate SBS19 raised R400m, and priced at R208 + 165 bps.
Blue Granite In-vestments No. 2
27 July Six notes R2.2bn The issuer was aiming to raise up to R2.4bn. The issue was allocated as follows:
The A1 note, rated Aa2/Aaa.za, raised R225m and priced at 3M Jibar + 140 bps. The pricing was wider than the guidance of 110 bps to 135 bps;
The A2 note, rated Aa2/Aaa.za, raised R600m, and priced at 145 bps over 3M Jibar; the top end of pricing guidance;
The A3, Aa2/Aaa.za -rated note, raised R1.1bn. The note priced at 3M Jibar + 160 bps; the top end of the pricing guidance;
The B mezzanine note, rated Baa1/A1.za, raised R118m, and priced at 210 bps over 3M Jibar (the top end of the pricing guidance);
The C mezzanine note, rated Ba1/Baa1.za, raised R77m. The note priced at 3M Jibar + 260 bps; the top end of the pricing guidance; and
The D junior note, rated B2/Ba2.za, raised R71m, and priced at 400 bps over 3M Jibar; at the top end of the pricing guidance.
The pool comprises 4,324 home loans, with an aggre-gate balance of R2.2bn. The current weighted average LTV is 67.3% and the PTI ratio is 16.99%. The average seasoning of the pool is 46 months.
Table 4: Previous credit issues and taps (continued)
Sources: Standard Bank Research; Issuer announcements; JSE
10
Monthly Market Barometer — July 2011
Credit Research
Issuer Date of issue Bond code Amount raised Details and commentary
Bidvest 27 July 3-month CP R1.5bn The paper priced at 22 bps over 3M Jibar.
Denel 28 July 3-month CP R550m The paper priced at 3M Jibar + 10 bps.
Growthpoint Prop-erties Ltd
28 July 3-month CP R300m The paper, which is rated P-2.za, priced at 38 bps over 3M Jibar.
Table 4: Previous credit issues and taps (continued)
Sources: Standard Bank Research; Issuer announcements; JSE
Table 5: Coupons and redemptions due in Q3:11
Sources: Standard Bank Research; JSE
Coupons due (Q3:11)
Government R4.2bn
Corporate R1.1bn
Financial R484.7m
Municipal R43.0m
SOE R896.8m
Securitisation R208.6m
R11.4bn
R381.3m
R2.5bn
R259.8m
R1.3bn
R289.9m
R1.6bn
R119.8m
R446.7m
-
R2.0bn
R243.4m
July August September
Redemptions (Q3:11) Bond code Maturity Amount
African Bank ABL5 11 August 2011 R597.7m
Mercedes Benz SA MBF04 22 August 2011 R165m
Nedbank NILB6 29 August 2011 R130m
Nedbank NBRN1 31 August 2011 R44m
Absa ABN01 15 September 2011 R4m
Standard Bank SBR002 15 September 2011 R475m
INCA INJ01 21 September 2011 R100m
FirstRand FRBI03 30 September 2011 R1.1bn
Absa ABCL3 30 September 2011 R40m
Securitisation - - R2.0bn
11
Monthly Market Barometer — July 2011
Credit Research
Monthly spread movers — July 2011
We have seen very little credit spread activity in July, only 35 bonds recorded moves, while 127 remaining flat. However, we
continue to see selective large moves tighter; certain bonds are trading at extremely tight (and occasionally distorted) levels.
On the whole, asset swap spreads widened across 124 bonds, with 28 tightening and seven remaining static.
Trading volumes remained fairly stable m/m, with 2,684 trades for R15.6bn. As is the norm, the largest amount of trading activ-
ity occurred in the AAA space. Both DBSA and Eskom had high trading volumes but this was outweighed by the R4.8bn of
trades across TCTA’s bonds. New issuance assisted volumes in the AA space, with Toyota raising R760m. Within banks,
trades totalled R3bn; the largest was the SBS19, with trades of R904m.
The CBL08 was the largest mover of the month, tightening by 250 bps. The bond is now pricing more in line with Capitec’s
other bonds, and therefore this tightening action appears reasonable. However, we believe the SMF3 is market anomaly, as
the bond is pricing at 30 bps over its benchmark. Given Sappi’s underlying credit quality, and the pricing of the other Sappi
bonds — with the recently issued SSA01 (2016, 12.13%) pricing at R203 + 150 bps — the pricing on this bond is out of line
with the market. We view the SMF3 as extremely mis-priced at its current spread. However, we note that the bond did trade at
this level.
Top 10 movers Credit spread
movement ASW movement Spread to benchmark Trading activity
CBL08 -250 -222 R203 + 250 bps R20.0m
SMF3 -95 -105 R206 + 30 bps R161.8m
FRX31 -58 -26 R157 + 75 bps -
COJ04 -20 -10 R203 + 200 bps R254.3m
SBS4 3 8 R157 + 263 bps R422.7m
NBK8A 3 14 R206 + 131 bps -
COJ02 3 15 R157 + 253 bps -
WSP4 5 8 R204 + 74 bps R1.2m
BAW11 21 0 R204 + 168 bps R53.3m
FRX15 -18 1 R157 + 75 bps R50.3m
Table 6: Top 10 credit spread and asset swap spread movers — July 2011
Fitch has affirmed Transnet’s local and foreign ratings at BBB+/F2 and BBB-/F3, respec-tively. The national scale ratings were also affirmed at AAA(zaf) (government guaranteed debt) and AA-(zaf) (senior unsecured debt). The outlook is stable.
Agency view: The agency views Transnet’s role in SA as critical because it has a monopoly position in freight rail, ports and pipelines. The ratings reflect its operational, legal and strategic ties to the SA government. Transnet is rated on a top-down basis; therefore, any change in the sovereign’s rating or the level of government support is likely to impact on the ratings. Fitch expects Transnet’s standalone credit profile to weaken over the next three to five years because of its R110.6bn capex programme. The programme is expected to be funded by both internally generated cash and long-term debt. The agency expects free cash flow to remain negative. However, higher tariffs, improved productivity and efficiency, and cost management could reduce the impact of the capex programme on cash flow. The rating agency does not expect the government to guarantee new debt; currently, R9.5bn of the group’s debt (of R60bn) is guaranteed by the government.
Standard Bank Research view: We expect Transnet to remain cash generative, and we expect the entity should be able to fund at least part of its capex by cash. We also expect the SA government will support the entity, if required. Therefore, we agree with the rating action.
Vodacom zaAA-/zaA-1
- - S&P has assigned Vodacom a national scale rating of zaAA-/zaA-1.
Agency view: S&P views Vodacom as a leading mobile operator in SA’s mature teleco’s market. The group generates robust free cash flow and has a moderate amount of debt. S&P expects Vodacom’s SA operations to remain resilient over the next 12 months, maintaining a strong market position, robust profitability and solid cash flows. The agency also expects the group to carefully manage risks relating to its international operations, and to maintain a conserva-tive capital structure commensurate with its rating. The rating is constrained by intensifying competition and increasing regulatory pressures in SA, large capex requirements, and above-average risks (political, operational and currency) in Vodacom’s international mar-kets.
Standard Bank Research view: Vodacom is a prominent player in the SA teleco’s market. The ratings appear appropriate for the level of risk associated with the industry.
Blue Granite Investments No. 2 (Pty) Ltd
- - - Blue Granite Investments No. 2 (Pty) Ltd’s residential mortgage backed notes have been assigned provisional ratings by Moody’s as follows:
The class A1 notes were assigned ratings of (P)Aa2 (sf) /(P)Aaa.za (sf);
The class A2 notes were assigned ratings of (P)Aa2 (sf) /(P)Aaa.za (sf);
The class A3 notes were assigned ratings of (P)Aa2 (sf) /(P)Aaa.za (sf);
The class B notes were assigned ratings of (P)Baa1 (sf) /(P)A1.za (sf);
The class C notes were assigned ratings of (P)Ba1 (sf) /(P)Baa1.za (sf); and
The class D notes were assigned ratings of (P)B2 (sf) /(P)Ba2.za (sf).
Agency view: The provisional ratings take into account the credit quality of the underlying mortgage loan pool, the expected loss of the portfolio, the transaction structure, and any legal considera-tions underpinning the agency’s assessment model. The notes are supported by prime mortgage loans secured by residential properties in South Africa and four separate cash reserve funds. Moody’s will assign final ratings to the notes once the transaction details have been finalised.
Standard Bank Research view: The portfolio is well seasoned, and we believe this has been taken into account in assigning ratings to the transaction.
Sources: Standard Bank Research; Fitch Ratings; Standard & Poor’s; Moody’s Investor Services
13
Monthly Market Barometer — July 2011
Credit Research
Rating agency actions — July 2011 (continued)
Issuer Rating
Previous
rating
Rating
action Commentary
Basil Read A-/A1- A/A1- GCR has placed Basil Read’s A-/A1- rating on a ratings watch.
Agency view: The challenging conditions in the construction industry were the primary reason for the action. The scarcity of new contracts and tender delays from the government also contrib-uted to the action. The agency views the lower margins (partially due to rising input costs) as concerning. However, the group’s core roads division (which accounts for 66% of total earnings) aided the group’s robust net profits. The group has expanded its operations into mining through TWP (its mining subsidiary). In FY:10, the mining division grew its order book to R9.1bn; R4bn of which relates to projects in FY:11.
Standard Bank Research view: All players in the construction sector appear to be under pressure. Within this context, we view the action as appropriate.
Eskom A
AAA(zaf)/F1+(zaf)
A
AAA(zaf)/F1+(zaf)
Fitch has affirmed Eskom’s long-term local currency rating at A, and its national scale rating at AAA(zaf)/F1+(zaf). The outlook is stable.
Agency view: Fitch has stated that any rating action taken on the sovereign would result in a similar action on the utility. The government increased its support to Eskom during FY:11. Fitch believes that higher levels of transparency from the government and regulators should allow Eskom’s standalone credit profile to normalise — this could result in an international investment-grade rating over the medium term. Eskom is strategically important to South Africa, supplying approximately 95% of the country’s electricity requirements. The utility's revenue increased by 28.6% during FY:11, boosted by higher electricity tariffs. Fitch ex-pects the higher tariffs and lower operational costs to aid Eskom’s financial profile over the medium term.
Standard Bank Research view: Eskom is aiming to achieve stand-alone investment grade ratings by 2014/2015. We be-lieve this will be extremely difficult to achieve, and unlikely to occur in the medium term. We view Eskom’s ratings as supported by the SA government but we disagree with Fitch’s comments.
Impala Platinum Holding Ltd (Implats)
With-drawn
BBB/F3
A+(zaf)/F1(zaf)
- Fitch has affirmed and withdrawn Implats’ BBB/F3 global foreign currency rating and its A+(zaf)/F1(zaf) national scale rating.
Agency view: Implats will not continue to participate in the agency’s credit rating process.
Standard Bank Research view: The SA Home Loans portfolio has historically performed well. The transaction has a WA LTV of 64.09% and a PTI ratio of 18.47%. We view the originator as robust, and expect the transaction to be well-managed. Therefore, the ratings appear appropriate.
Thekwini Fund 9 (Pty) Ltd
Moody’s has assigned final ratings to Thekwini Fund 9’s residential mortgage backed notes as follows:
The THE9A1 note was rated Aa2 (sf) /Aaa.za (sf);
The THE9A2 note was rated Aa2 (sf) /Aaa.za (sf);
The THE9A3 note was rated Aa2 (sf) /Aaa.za (sf);
The THE9B note was rated Baa2 (sf) /A2.za (sf); and
The THE9C note was rated Ba3 (sf) /Baa3.za (sf). Moody’s has withdrawn the provisional rating for the Class A4 note, which was not issued.
Agency view: The ratings take into account the credit quality of the underlying mortgage pool, the ex-pected loss of the portfolio, the transaction structure, and any legal considerations as as-sessed by Moody’s. The definitive ratings also take into account the expected loss relating to the 5-year tenor of the notes. The notes are supported by prime mortgage loans which are secured by residential properties in South Africa.
Sources: Standard Bank Research; Fitch Ratings; Standard & Poor’s; Moody’s Investor Services
14
Monthly Market Barometer — July 2011
Credit Research
Rating agency actions — July 2011 (continued)
Issuer Rating
Previous
rating
Rating
action Commentary
Steinhoff In-ternational Holdings Lim-ited
A-(zaf)/F2(zaf)
A-(zaf)/F2(zaf)
- Fitch has commented on the sale of Steinhoff SA’s retail business to the JD Group.
Agency view: The transaction is not expected to have an effect on Steinhoff’s rating of A-(zaf)/F2(zaf). The sale of Steinhoff’s SA retail business, which includes its automobile retail and building materials businesses, amounted to R3.2bn — with R702m be funded by cash, and the remaining R2.5bn paid via JD Group shares.
JD Group is, in turn, waiting for the Polish Competition Authorities’ approval for the im-pending sale of its Polish furniture retail business to an associate of the Steinhoff group, valued at R134m. Fitch views Steinhoff’s new business developments and its market and strategic re-profiling positively. The agency also noted that the Conforama transaction would increase its European presence. Although Fitch expects neither transaction to have a significant impact on Steinhoff’s current leverage profile, the agency believes that the group’s net adjusted leverage position would moderate once the deals have been final-ised.
Standard Bank Research view: We view these transactions positively, and do not believe the rating should be impacted.
Absa Group Ltd (Absa) and Absa Bank Ltd
A
AAA(zaf)/F1+(zaf)
A
AAA(zaf)/F1+(zaf)
Fitch has affirmed Absa’s and Absa Bank’s global rating at A, and national scale rating at AAA(zaf)/F1+(zaf). The outlook is stable.
Agency view: The ratings take into account the high likelihood of support from Absa’s parent (Barclays Bank plc). The Viability Rating (VR) of bbb+ takes into account the bank’s position in the SA market and its adequate capital levels. However, a decline in asset quality (which the agency believes could continue in the medium term) restricts the VR. Fitch noted that revenue has been pressurised in recent years because interest rates are low and loan book growth has been muted. However, earnings have remained constant; net interest income has been aided by the group’s hedging activities. Although the agency expects revenue growth to remain soft in FY:11, earnings may grow because of lower impairment charges. However, rising costs could negatively impact earnings growth. Fitch views Absa and Absa Bank’s core Tier 1 capital levels as “acceptable” in light of poorer asset quality and the performance of the mortgage book.
Standard Bank Research view: Absa’s performance has been pressurised by the weak lending environment. However, we view the bank as well capitalised. We expect Absa to continue to perform reasonably well under the currently strained economic conditions. Therefore, the affirmation appears appropriate.
Liberty Group Limited
AA(zaf) (IFS)
AA-(zaf)
A+(zaf)
AA(zaf) (IFS)
AA-(zaf)
A+(zaf)
Fitch has changed Liberty’s outlook to stable, from negative. The group’s Insurer Finan-cial Strength (IFS) rating was affirmed at AA(zaf), the national scale rating at AA-(zaf), and the subordinated debt rating at A+(zaf).
Agency view: The change in outlook stems from an improvement in the management of policyholder persistency; persistency levels were more robust than expected in FY:10, even though actuarial assumptions were not materially altered. However, new business margins re-mained low because the group has focused on writing higher quality business, which has resulted in lower volumes. Relatively higher acquisition costs have also impacted on new business margins. However, the agency expects these margins to improve somewhat in H2:11 because new actuarial assumptions are likely to take improved persistency levels into account. The ratings are supported by Liberty’s strong capital profile, its es-tablished position and diverse distribution networks in SA, and its prudent risk manage-ment practices. The group’s success with Standard Bank in the bancassurance business also supports the rating. However, Liberty is exposed to volatility in investment markets which constrains its rating. Although the agency does not view an upgrade in the short- to medium term as likely, an upgrade could occur if new business margins increase, vol-umes improve, and capital levels remain robust.
Standard Bank Research view: The outlook has been adjusted because the agency believes Liberty’s performance is improving. Liberty’s performance has been muted; we agree with the agency’s statement that an upgrade is unlikely in the short-to-medium term.
Sources: Standard Bank Research; Fitch Ratings; Standard & Poor’s; Moody’s Investor Services
15
Monthly Market Barometer — July 2011
Credit Research
Rating agency actions — July 2011 (continued)
Issuer Rating
Previous
rating
Rating
action Commentary
Standard Bank of South Africa (SBSA)
BBB/A-2 BBBpi - S&P has converted SBSA’s BBBpi counterparty rating to an unsolicited rating of BBB/A-2. The outlook is positive.
Agency view: The conversion stems from a change in the agency’s structured finance criteria for coun-terparty and supporting obligations. The unsolicited rating will form part of the credit rating of Blue Granite’s class A notes. The rating is supported by SBSA’s position in the SA banking industry and its position in the Standard Bank Group — the largest financial ser-vices group in Africa. SBSA’s stable funding from deposits and improving asset quality and earnings also support the rating. However, S&P noted that the rating is constrained by the group’s dependence on short-term corporate funding and the weak performance of its mortgage portfolio. The agency expects the group’s financial profile may improve as economic conditions and the housing market have shown signs of improvement, which is taken into account with a positive outlook. The agency expects operating and risk costs to decline slowly in 2011/12, which could boost asset quality and earnings.
Standard Bank Research view: The agency has highlighted SBSA’s strengths and challenges, and we view the rating as appropriate.
Prime Realty Obligors Packaged Securities Series 2 – Class A notes
AAA(zaf) AAA(zaf) Fitch has affirmed Prime Realty Obligors Packaged Securities Series 2’s class A2 notes at AAA(zaf); the outlook is stable. Currently, R621m is outstanding on these notes.
Agency view: The transaction was restructured on 4 January; four outstanding loans were repaid and the proceeds were used to redeem the class A1, B and C notes for R941m. Two loans remain in the portfolio. The value of the portfolio has increased by 57% since 2007; there-fore, the LTV ratio has increased to 31.2%. However, Fitch does not rely on the LTV ratio to assess the rating. The debt yield (of >20%) is viewed positively by the agency. The early repayments of the loans has caused the weighted average interest coverage ratio to decline; however, it is still robust at 2.54x.
Standard Bank Research view: The transaction is substantially smaller, and therefore the affirmation appears acceptable.
Standard Bank of SA (SBSA)
Standard Bank Group (SBG)
BBB+/F2
AA(zaf)/F1+(zaf)
BBB+/F2
AA(zaf)/F1+(zaf)
Fitch has taken the following rating actions on SBSA’s and SBG’s ratings:
SBSA’s foreign currency Issuer Default Ratings (IDR) were affirmed at BBB+/F2;
SBSA’s local currency IDR was affirmed at BBB+;
SBSA’s AA(zaf)/F1+(zaf) national ratings were affirmed;
SBSA’s senior unsecured debt ratings were affirmed at BBB+/F2;
SBG was assigned foreign currency IDRs of BBB+/F2;
SBG was assigned a local currency IDR of BBB+;
SBG was assigned a Support Rating Floor of NF (no floor);
SBG’s national short-term rating of F1+(zaf) was affirmed; and
SBSA and SBG’s bbb+ viability ratings were affirmed.
The outlook on all ratings is stable. The viability ratings of SBSA and SBG are the same, at bbb+, due to the SARB’s consistent supervision of both entities, as both group’s enti-ties are highly integrated.
Agency view: SBSA’s entrenched position in SA, the consistent profitability in its core operations, and capital levels were noted as positive rating contributors. These factors are offset by weak-ening asset quality trends, which may continue into the medium term. However, the agency believes that this trend may have reached a peak after slowing during FY:10. The ratings also account for the group’s risky global emerging market banking operations. In FY:10, SBSA’s earnings increased, significantly aided by profits from Liberty.
Standard Bank Research view: The ratings are commensurate with Standard Bank’s performance and appear appropri-ate.
Sources: Standard Bank Research; Fitch Ratings; Standard & Poor’s; Moody’s Investor Services
16
Monthly Market Barometer — July 2011
Credit Research
Rating agency actions — July 2011 (continued)
Issuer Rating
Previous
rating
Rating
action Commentary
Nitro Securiti-sation 4 Is-suer Trust
Moody’s has assigned provisional ratings to the three tranches of Nitro 4 asset backed notes as follows:
The Class A1 to A14 notes, which are expected to raise a total of R3.2bn, were as-signed ratings of (P)Aa2 (sf) / (P)Aaa.za (sf);
The Class B notes, which are expected to raise R286m, were assigned ratings of (P)Baa2 (sf) / (P)A1.za (sf); and
The Class C notes, which are expected to raise R140m, were assigned ratings of (P)Ba2 (sf) / (P)Baa1.za (sf).
Agency view: The provisional ratings take into account eight years of historical performance data, credit enhancements supplied by the arrears reserve, the subordination of the notes, the liquid-ity support available in the transaction, and any legal considerations underpinning the transaction. The notes are supported by SA auto loans, originated through dealerships. Moody’s will assign final ratings to the notes once the transaction details have been final-ised.
Standard Bank Research view: The ratings take into account the underlying assets and therefore appear appropriate for the level of risk in the transaction.
Mondi plc Baa3 Baa3 Moody’s has changed the outlook on Mondi’s Baa3 domestic currency issuer rating to positive, from stable, following the release of the group’s H1:11 results. Mondi Finance plc’s rating remains at Baa3/P-3.
Agency view: Mondi’s financial metrics have improved because prices have increased over time, and demand and supply fundamentals for paper products in Europe have equalised. The group’s position within its rating band is strong because of its diversified business (both geographically and by products), reduced debt levels, strong market position, and consis-tently strong financial metrics. Moody’s expects Mondi may continue to produce high cash flows due to improved working capital management and lower capex spend.
Standard Bank Research view: The rating factors in the risks associated with the paper industry and therefore appear appropriate.
Savcio Hold-ings
B+ B+ S&P has placed Savcio’s B+ rating on CreditWatch with developing implications, as shareholders intend to sell the company to Actom.
Agency view: Savcio and Actom have entered into a binding sales agreement, involving a complete sale of Savcio’s issued share capital to Actom. Savcio’s ratings will be withdrawn if the debt is repaid under the transaction. Savcio currently has notes outstanding that may be called in February 2012. The agreement is pending regulatory approval. S&P will assess the method of funding to be used for the transaction, and the combined leverage of Savcio and Actom on completion of the transaction. The agency expects to conclude its assessment once the details of the transaction have been finalised.
Standard Bank Research view: We cannot comment on the rating action until the transaction details have been finalised.
Sources: Standard Bank Research; Fitch Ratings; Standard & Poor’s; Moody’s Investor Services
17
Monthly Market Barometer — July 2011
Credit Research
Sources: Standard Bank Research; JSE Sources: Standard Bank Research; JSE
Forecast vs. actual issuance
Debt capital market issuance
2.7%
33.2%
3.9%
31.4%
10.6%
2.4%
6.8%
8.9%
Municipal Government State Ow ned EnterprisesWater Authorities Financial SectorCorporates Commercial PaperCredit Linked Notes Securitisation
;
Total issuance per sector
0
25
50
75
100
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Rbn
Credit Securitisation
Total annual credit issuance
0
9
18
26
35
SOEMunicipalities
CorporatesFinancials
Securitisation
Rbn
2011 forecast 2011 YTD
Sources: Standard Bank Research; JSE Sources: Standard Bank Research; JSE
Sovereign credit default swap spreads1 iTraxx Indices2
Sources: Standard Bank Research; Bloomberg Sources: Standard Bank Research; Bloomberg
Sources: Standard Bank Research; Bloomberg Sources: Standard Bank Research; Bloomberg
EMBI vs. SA sovereign CDS1 USD rates
0 62.5 125 187.5 250
Brazil
Bulgaria
China
Kazakhstan
Mexico
Russia
South Africa
Thailand
Turkey
bps01-Jul-11 31-Jul-11
-
300
600
900
1,200
Jan-08 Sep-08 Jun-09 Feb-10 Nov-10 Jul-11
price
Europe HiVolCrossover Senior FinancialsSubordinated Financials
0
235
470
705
940
Apr-07 Feb-08 Dec-08 Nov-09 Sep-10 Jul-11
bps
SA Sovereign CDS EMBI Global Spread
0
2
3
5
6
Dec-06 Nov-07 Oct-08 Sep-09 Aug-10 Jul-11
%
USD LIBOR USD Overnight Indexed Sw ap (OIS)
Notes:
1. Sovereign CDS: Cost of protection against default by sovereign entity. Higher value denotes increased default worry with protection correspondingly more ex-pensive.
2. iTraxx: Basket of credit derivatives representing different segments of debt in Europe. Higher values imply increased cost to buying protection. Graph above is a generic Bloomberg quote, combining the various iTraxx indices.
Republic of South Africa Global FC/LC debt A3 Stable LT FC debt BBB+ Stable FC LT debt BBB+ Stable (S&P) Global ST P-2 ST FC debt F2 FC ST debt A-2 (S&P)
Absa Bank Ltd National Aa1.za/P-1.za Stable National AAA(zaf)/F1+(zaf)
Global LC A1/P-1 Stable / FC A3/P-2 Stable
Stable Global FC A/F1 Stable /
BFSR C– Stable LC A Stable
African Bank Ltd National A1.za/P-1.za Stable LT LC A / ST LC A1 Stable (GCR)
Global Baa2/P-2 Stable
African Development Bank Aaa/P-1 Stable, sub-debt: Aa1 AAA/F1+ Stable Global FC AAA/ A-1+ Stable (S&P)
Airports Company of SA Ltd National LT AA-(zaf)
National ST F1+(zaf) Stable
Anglo American plc Global FC Baa1/P-2 Stable BBB+/F2 Stable Global FC BBB+/ A-2 Stable (S&P)
DMTN: A1.za/ P-1.za National: zaAA/zaA-1 (S&P)
AngloGold Ashanti Ltd Global Baa3 Stable National LT A(zaf) Stable LT FC BBB- / LT LC BBB- Stable (S&P) National ST F1(zaf) National zaA/zaA-1 Stable
Aveng Ltd National LT A(zaf) Stable National ST F1(zaf)
Barloworld Ltd National A+(zaf)/F1(zaf) Stable LT LC A- Stable (GCR) Domestic medium-term note ST LC A1- Stable (GCR)
Programme A+(zaf)
Basil Read LT LC A- RWN (GCR) ST LC A1- (GCR)
BHP Billiton LT FC A1 Stable Global FC A+ Stable / F1 Global FC A+ / A-1 RWN (S&P)
Bidvest National A1.za / P-1.za Stable National LT A+(zaf) Positive LT LC A+ Stable (GCR) National ST F1(zaf) ST LC A1 Stable (GCR)
Bidvest Bank National A3.za / P-2.za Stable
BMW Finance N.V. Global FC (P)A2 / P-1 Stable
Breede Valley Municipality National LT A3.za Stable
Cape Winelands District Municipality National LT A3.za Stable
Capitec Bank Limited National LT A2.za/P-1.za Positive LT LC BBB+ / ST LC A2 Positive (GCR)
Cell C (Pty) Ltd Global FC Caa2 Global LT B- Positive (S&P)
City of Cape Town National Aa2.za / P-1.za Stable
City of JHB National LT Aa3.za Stable National AA-(zaf)/F1+(zaf) Stable
Global LC LT BBB+ Stable
City of Tshwane Aa3.za / P-1.za Stable
Colgate-Palmolive (Pty) Ltd Global Aa3/P-1 Stable Global AA-/F1+ Stable Global AA-/A-1+ Stable (S&P)
Consol Glass (Pty) Ltd Global B1 Stable Global LT B+ Stable (S&P)
Daimler (Mercedes-Benz SA) Global A3/P-2 Negative Global LT A-/F2 Stable LT issuer BBB+ Positive (S&P) (Global ratings for DaimlerAG) National Aa2.za /P-1.za Negative National AA(zaf) ST issuer A-2 Positive (S&P) National ST F1+ (zaf)
LC A / A-1 Stable (S&P)
Sources: Standard Bank Research; Respective credit rating agencies
32
Monthly Market Barometer — July 2011
Credit Research
Appendix 1 (continued): SA corporate credit ratings
Rated South African Entity Moody’s Fitch Other
Denel (Pty) Ltd National LT AA(zaf) Negative National ST F1+(zaf)
Development Bank of SA Global A3 Stable National LT AAA(zaf) Stable Global FC BBB+/A-2 Stable (S&P) National ST F1+ (zaf) Global LC A/A-1 Stable (S&P)
Drakenstein, Municipality of National LT A3.za Stable
Eagle Bonds One Prop. Ltd Global LT Aaa National LT Aaa.za
East Rand Water Care Company National A1.za Stable
Edcon Holdings (Pty) Ltd Global FC LT Caa1 Negative Global LT B- Stable (S&P)
Ekurhuleni National LT Aa2.za/P-1.za
Eqstra Corporation Ltd zaBBB+/zaA-2 (S&P)
Eskom Holdings Ltd Global FC Baa2 Stable National LT AAA(zaf) Stable National zaAA/zaA-1 (S&P)
Global LC Baa2 Stable National ST F1+(zaf) Global LC LT BBB+ Stable (S&P)
FirstRand Bank Ltd National LT Aa2.za Stable National LT AA(zaf) Stable Global FC BBB+/A-2 Stable (S&P) National ST P-1.za National ST F1+(zaf) Global LC BBB+/A-2 Stable (S&P)
Global (FC) A3/P-2, Global (LC) A2 Stable, C– Stable
Global BBB+/F2 Stable National zaAA/zaA-1 Stable (S&P)
Foodcorp (Pty) Ltd Global FC LT B2 Stable Global LT B- Stable (S&P)
Genbel Securities Ltd National A+(zaf)/F1(zaf) Stable
General Reinsurance Africa Ltd FSR AA+ Stable (S&P)
George Municipality National LT A2.za
Gold Fields Ltd Global Baa3 (LC) Stable Global BBB-/A-3 Stable (S&P) National zaA/zaA-1 Stable (S&P)
Greater Tzaneen Municipality National LT Baa2.za Stable
Grindrod Bank Ltd National Baa3.za/P-3.za Stable
Group Five Construction Ltd LT LC A Developing (GCR) ST LC A1 Developing (GCR)
Growthpoint Properties Ltd Global LC Baa3/P-3 Stable
National A2.za/P-2.za Stable
Hannover Reinsurance Africa Ltd FSR A Stable (S&P) Global LC LT A Stable (S&P)
Sources: Standard Bank Research; Respective credit rating agencies
33
Monthly Market Barometer — July 2011
Credit Research
Sources: Standard Bank Research; Respective credit rating agencies
Appendix 1 (continued): SA corporate credit ratings
Rated South African Entity Moody’s Fitch Other
Home Loan Guarantee Company National FSR AA+(zaf) Stable
Imperial Bank Ltd National LT AA-(zaf) RWP
National ST F1+(zaf)
Imperial Capital Limited National A1.za/P-1.za Stable
Imperial Group Ltd National A2.za/P-1.za
Global Baa3 Stable
Imperial Mobility Finance BV Global FC LT Baa3 Stable
Industrial Development Corp Global A3 National AA(zaf) / F1+(zaf) Stable
Infrastructure Finance Corporation Ltd (INCA) National LT Baa2.za Negative National ST P-2.za
Investec Bank Ltd National Aa2.za/P-1.za Stable National A+(zaf)/F1(zaf) Stable Global (LC)A2 Stable, (FC) A3/ P-2 Global FC BBB/F3 Stable BFSR C- Stable
Kagiso Trust Investments National LT Baa2.za Stable
Knysna Municipality National LT Baa2.za Stable
Land and Agricultural Development Bank National LT AA(zaf) Stable
National ST F1+(zaf)
Liberty Group Ltd FSR AA(zaf) Stable
National LT AA-(zaf) Stable; sub-debt A+(zaf)
Macquarie Securities South Africa (Pty) Ltd National zaAA+/zaA-1 (S&P)
Global LC A-/A-2 (S&P)
Massmart Holdings Ltd A+/A1 Stable (GCR)
Mauritius Commercial Bank National Aa3.za
Global Baa2/P-2 Stable
Mercantile Bank Ltd National A3.za/P-2.za Review for possible downgrade
Metropolitan Holdings Ltd National LT A+(zaf) Stable
Metropolitan Life Ltd FSR AA(zaf) Stable
National LT AA-(zaf) / sub-debt A(zaf)
Momentum Group Ltd FSR AA(zaf) Stable
National AA-(zaf) / sub-debt A(zaf)
Momentum Health – domestic currency claims paying ability
A+ (GCR)
Mondi Global Baa3/P-3 Positive Global LT BB+ Positive (S&P)
MTN Group Ltd National LT A2.za Positive National LT AA-(zaf) Stable LT LC AA- Stable (GCR)
Global LT Baa3 Positive National ST F1+(zaf) ST LC A1+ Stable (GCR)
34
Monthly Market Barometer — July 2011
Credit Research
Sources: Standard Bank Research; Respective credit rating agencies
Appendix 1 (continued): SA corporate credit ratings
Rated South African Entity Moody’s Fitch Other
Munich Mauritius Reinsurance Ltd Global LC LT A Stable (S&P)
Munich Reinsurance Co. of Africa Ltd Global LC LT A Stable (S&P)
Mutual & Federal Insurance Co Ltd – domestic currency claims paying ability AA+ Stable (GCR)
Namibia Ports Authority (Pty) Ltd National A-(zaf)/F2(zaf) Positive
Namibia Power Corporation National AA-(zaf)/F1+(zaf) Positive
Global BBB-/F3 Positive
Naspers Ltd Global FC BBB-/F3 (Stable)
National LT A(zaf) Stable
National ST F1(zaf)
Nedbank Ltd National Aa2.za Stable National LT AA-(zaf) Stable
National ST P-1.za National ST F1+(zaf)
Global FC A3/P-2 / LC A2/P-1 Stable C– Stable
Global FC BBB/F2 Stable / LC BBB Stable
Nelson Mandela, Metropolitan Municipality National LT Aa3.za Stable