Chamwe Kaira
FirstRand Limited has launched a N$150 billion domestic medium-term note (DMTN) programme to raise funds in the South African capital market.
The programme allows FirstRand to issue a range of unsecured debt instruments.
It enables the group to raise up to N$150 billion in total outstanding nominal value, unless the limit is increased under the programme’s terms.
In Namibia, FirstRand Namibia Group owns FNB Namibia and RMB Namibia.
Notes under the programme may be issued on a continuous basis. They may be structured as senior or subordinated instruments. Some notes may qualify as regulatory capital or FLAC (FirstRand Limited Additional Capital), depending on the terms of each issue.
FirstRand may issue fixed-rate notes, floating-rate notes or a mix of both. Other note structures may also be considered if they are approved by the Johannesburg Stock Exchange (JSE) or any other exchange where the notes are listed and if they comply with relevant laws.
The group warned investors about risks linked to operating in South Africa and other African markets. It cited macroeconomic volatility, exchange controls and regulatory pressure as factors that could affect its business and the value of its notes.
The group said South Africa and other African markets face risks common in emerging economies. These include high interest rates, rising inflation, exchange rate swings, capital outflows and industrial actions.
It also pointed to other challenges such as electricity supply problems, water shortages and weaknesses in transport and logistics infrastructure. Wage controls and security concerns may also affect economic and financial stability.
FirstRand said its dealings in its notes and the fulfilment of its obligations may fall under South Africa’s exchange control rules.
Under current rules, non-residents may invest in South Africa if they provide the required documentation and comply with exchange control principles. Transactions must take place at fair and market-related prices.
Proceeds from the sale or redemption of South African assets owned by non-residents may be transferred abroad if these rules are met.
If a transaction does not fully meet the requirements but shows merit, relief may be requested from the South African Reserve Bank through authorised dealers.
The South African minister of finance has supported a gradual easing of exchange controls to allow more open capital flows. Recent policy changes include easing capital rules for emigrants and removing some limits on certain “loop structures”.
FirstRand said changes in government policy, laws or regulatory interpretation in the sectors where it operates could affect its products, distribution channels, capital requirements and environmental or social obligations.
It warned that higher capital or liquidity requirements, or changes in accounting standards, could affect its business, financial position and financial results.
