2nd Apr 2020 14:03
(Alliance News) - Investec Ltd said Thursday credit ratings agency Fitch has downgraded the financial services firm's long-term issuer default ratings and viability rating.
The ratings were cut to BB and bb from BB+ and bb+, respectively.
Fitch also revised Investec's outlook to Negative from Stable.
"According to Fitch, the rating action is driven by Fitch's expectation of a negative impact from the coronavirus outbreak on the South African banks' operating environment and key financial metrics, notwithstanding uncertainty as to the full economic and financial market implications," Investec said.
Investec Bank Ltd was also recently downgraded by Moody's, following Moody's downgrade of South Africa. The South African sovereign ratings act as a ceiling whereby the ratings of South
banks cannot be above that of the sovereign, Investec noted.
The company added: "The downgrades, taken in isolation of any other matters, are expected to have an immaterial impact on Investec's risk weighted assets and therefore the impact on regulatory capital is also expected to be immaterial. In addition, the downgrades are expected to have a small impact on Investec Ltd's cost of funds over time, as a result of Investec Ltd being predominantly domiciled in South Africa and raising most of its deposits and funding in the closed rand system, with very little mismatch between foreign denominated funding and foreign denominated assets."
Investec Ltd is listed on the Johannesburg Stock Exchange and houses the company's Southern African operations. Investec PLC is listed on the London Stock Exchange - with a secondary listing on the Johannesburg Stock Exchange - and houses the company's non-Southern African operations.
Shares in Investec Ltd were 8.3% higher in Johannesburg on Thursday at ZAR35.17 each. Investec PLC was 8.7% higher in Johannesburg at ZAR34.11, in London, the shares were 5.9% higher at 148.30 pence.
By Paul McGowan; [email protected]
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