The Land Bank is anticipating that it might default on its debt due on Thursday if bondholders don’t let it postpone its repayments.
A default would result in the threshold for a cross default being breached – meaning that all the bank’s other debt becomes payable.
The bank however said it is still engaging with affected lenders about waiving the event of default and postponing repayments due on Thursday. “As soon as these discussions conclude the Land Bank will announce the outcome of such discussions,” it said.
The bank, which recently approached National Treasury to avoid defaulting on other debts, also said it may have already defaulted on its domestic bond notes issued in 2010 and 2017 totalling about R50 billion.
In a statement on Thursday morning, the state-owned development bank said that these defaults did not, however, automatically trigger a cross default.
This means that if the bank is able to successfully negotiate the deferral of debt that falls due on Thursday, it will be afforded more room to breathe.
Approximately R738 million of the bank’s debt is scheduled to mature before the end of April, but given its current liquidity problems, it needs to defer these repayments.