Moody’s: Industrial Development Corp. NSR Aa1.za

Moody's Investors Service said it assigned a long-term national scale issuer rating of Aa1.za to the Industrial Development Corp. of South Africa.

Moody's noted that the national scale rating of Aa1.za is mapped directly from its long-term global scale issuer rating of Baa3 (negative outlook), reflecting the company’s strong relative creditworthiness among debt issuers in South Africa.

The agency said Industrial Development's ratings capture its standalone credit profile of ba2, reflecting its strong capital buffers, with an equity-to-assets ratio of 68% as of March, but also its high asset risks, as evident by the challenging operating conditions, the high level of non-performing loans of 34% of gross loans, and its substantial equity portfolio (accounting for 39% of total assets) whose fair value is vulnerable to equity price movements.

Moody’s said the company has also displayed a stable funding profile and adequate liquidity buffers, but remains dependent on market funding and hence vulnerable to potential increased risk aversion by institutional investors.

The agency said the ratings also incorporate its assumptions of a high probability of government support in case of need, owing to its full government ownership and the developmental and policy role that it plays in the market.

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