Absa Group, led by South African executive Arrie Rautenbach, unveils $3.2 billion bond program

Absa Corporate and Investment Bank, a division of Absa Group, a Johannesburg-based diversified financial services provider led by South African banking executive Arrie Rautenbach, has introduced a bond program to bolster its capital position amid tighter regulations for South African banks.

The program, valued at R58.47 billion ($3.2 billion), unveiled today, includes the ASC121 note issuance. This move signifies a significant stride for Absa Corporate and Investment Bank, serving as the financing arm of Absa Group. The goal is to shore up regulatory capital, optimize the bank’s capital structure, and fuel its growth ambitions.

The credit-linked note, part of Absa Bank’s Authorized Program with an allocated size of R80 billion ($4.32 billion), caters to investors seeking credit exposure with competitive returns. It offers a floating coupon rate tied to the 3-month Johannesburg Interbank Average Rate (JIBAR) plus 3.75 percent.

The Johannesburg Stock Exchange Limited has approved the listing of the Absa Bank ASC121 note within the Master Structured Note Program Memorandum. This listing enhances liquidity and streamlines credit risk management.

Maturity, interest payments, and determination Dates

Demonstrating Absa’s commitment to strengthening its capital base, the ASC121 note matures on June 20, 2025. Interest payments are scheduled for March 20, June 20, Sept. 20, and Dec. 20, commencing June 20, 2024. Interest rate determination dates are set for May 7, 2024, and then every three months until March 20, 2025.

This unsubordinated and unsecured debt instrument provides valuable information for potential investors. It represents a strategic move by Absa Bank Limited to diversify its funding sources and effectively manage credit risk.

Absa Group’s financial performance Under Rautenbach’s Leadership

Arrie Rautenbach, a veteran South African banker with deep financial services expertise, holds a 0.026 percent stake (218,412 shares) in Absa Group, a leading South African banking group with an extensive branch network exceeding 12 million customers.

Since assuming the CEO role in 2022, Rautenbach has steered Absa Group to a period of robust financial performance. The group achieved a notable milestone in fiscal 2023, surpassing $5 billion in revenue for the first time, reaching $5.37 billion.

This 8.1-percent increase is credited to a multifaceted strategy implemented under Rautenbach’s leadership. Diversification of revenue streams, cost-control initiatives, prudent risk management, and strategic investments in high-growth areas all fueled the group’s expansion.