On Saturday, the 9th of May 2020, the South African Reserve Bank (Central Bank of South Africa) momentarily suspended any usage of debts issued by the Land Bank as collateral after the state-backed agricultural lender had been downgraded further in to a junk territory and had missed a $2.7 billion in loan repayments, leading to a default and eventually putting an additional pressure on S.
African lenders which had already been facing off a steep shortage of instruments required for accessing overnight cashes in order to maintain their regular operations. In point of fact, latest default of South Africa’s Land Bank, a Government-owned 108-year-old development bank, headquartered on Centurion, comes over the heels of a staggering shortage of liquidity as investors appeared to have fled local capital markets during the onset of pandemic and sold off emerging market assets including S.
African sovereign bonds alongside currency. Amid such a tempestuous outlook on South African lending industry, the Land Bank became the first institutional lender to be defaulted in late April due to a “liquidity shortfall”.
Meanwhile, referring to Land Bank’s debt-default on late-April over $2.7 billion worth of debt repayments, the Reserve Bank of South Africa said in a statement late on Friday (May 8th), “In light of recent developments surrounding the Land Bank, including the downgrade of the rating and the subsequent debt default, the SARB has taken a decision to temporarily suspend Land Bank bills as eligible collateral in its repo operations. ”