TLU SA predicts further downgrades of SOE’s after Moody’s junk status for Landbank
The downgrade of the Landbank to junk status by the credit rating agency Moody’s Investors Services is just the start of financial challenges that will give the agricultural industry a blow this year.
“It is increasingly getting more difficult to have a positive attitude towards the future of agriculture in South Africa,” says Mr Louis Meintjes, the president of TLU SA. “Not only are our farmers struggling to keep their heads above water because of challenges like farm safety, unreasonable labour laws, stock diseases, drought and limited export opportunities because of the poor economic climate, but now they are plunged into even more debt by a downgrade of the Landbank which provides credit to most farmers.”
The Landbank has been in review since November 2019 and is now a notch lower at Ba1 after the downgrade, placing it in junk status.
“It will become more expensive for the Landbank to do business because the bank depends on funds from somewhere else to provide credit to clients,” says Mr Meintjes. “As a result of the downgrade, the Landbank will have to pay more for the funds which will lead to an increase in the interest rate of clients.”
According to Moody’s the downgrade was done because they don’t foresee the state having enough room to support state-owned entities (SOE’s). The downgrade of the Landbank is just the beginning of downgrades of SOE’s and finally the country.
Moody’s is the only credit rating agency who have not downgraded the state to junk status. The next grading decision by Moody’s will happen in March and other agencies, Standard & Poor and Fitch Ratings, will probably decide over gradings after the budget speech on 13 February.
“For TLU SA it is a further stab in the heart that the Landbank – which was founded at the request of TLU SA in 1905 – could not succeed in its mandate because of continuous mismanagement and will probably be responsible for the downfall of many farmers.”
TLU SA voorspel verdere afgraderings van staatsentiteite na Moody’s se rommelstatus vir Landbank
Die afgradering van die Landbank na rommelstatus deur die kredietgradeerder Moody’s Inverstors Service is maar net die begin van finansiële uitdagings wat die landboubedryf vanjaar verder gaan knou.
“Dit raak voortdurend moeiliker om ‘n positiewe gesindheid oor die toekoms van landbou in Suid-Afrika te hê,” sê mnr. Louis Meintjes, die president van TLU SA. “Nie net moet ons boere daagliks sukkel om kop bo water te hou met uitdagings soos plaasveiligheid, onredelike arbeidswette, veesiektes, droogte en beperkte uitvoergeleenthede as gevolg van swak ekonomiese toestande nie, maar nou word hulle nog verder in skuld gedompel deur ‘n afgradering van die Landbank wat vir die meerderheid boere krediet verskaf.”
Die Landbank word reeds sedert November 2019 dopgehou en is na die gradering een keep laer op Ba1, wat dit in rommelstatus plaas.
“Dit gaan nou duurder vir die Landbank word om besigheid te doen want die bank is afhanklik van fondse van elders om krediet aan kliënte te verskaf,” verduidelik mnr. Meintjes. “As gevolg van die afgradering sal die Landbank nou meer moet betaal vir die fondse wat sal lei tot ‘n verhoging in die rentekoers vir hulle kliënte.”
Volgens Moody’s is die gradering gedoen omdat hulle nie voorsien dat die regering in die toekoms genoeg speling sal hê om staatsentiteite te ondersteun nie. Die afgradering van die Landbank is net die begin van afgraderings van verskeie staatsentiteite en uiteindelik die land self.
Moody’s is die enigste kredietgradeerder wat Suid-Afrika nog nie na rommelstatus afgradeer het nie. Die volgende graderingsbesluit van Moody’s word in Maart geneem en ander kredietgradeerders soos Standard & Poor’s en Fitch Ratings sal waarskynlik na die begrotingsrede op 13 Februarie ‘n besluit neem oor verdere graderings.
“Vir TLU SA is dit ‘n verdere dolk in die hart dat die Landbank – wat in 1905 op die versoek van TLU SA gestig is – as gevolg van jarelange onbekwame bestuur en wanbesteding nie in sy mandaat kon slaag nie en waarskynlik verantwoordelik gaan wees vir die ondergang van verskeie boere.”
