Edcon securitises another R1 billion of storecard debt
07 June 2004
The store group has decided to extend the programme indefinitely
The Edgars Consolidated Stores Limited (Edcon) has extended its successful OntheCards securitisation programme by securitising another R1 billion of storecard debt.
Securitisation is the process by which assets on a company's balance sheet are converted into marketable securities and sold to institutional investors.
On the Cards, arranged by Rand Merchant Bank, kicked off in July 2002 with the securitisation of R2.3 billion of retail storecard debt based on a portfolio of advances to two million Edcon customers.
The notes were well received by investors, and certain tranches were upgraded earlier this year by ratings agency Moody's to reflect their improved market performance.
The R1 billion extension announced today is also expected to go down well in the market. The new notes will be auctioned to investors on 10 June.
Edcon group Chief Executive-Group Services Mark Bower says: "Given the superb track record of the OntheCards programme so far, and the recent upgrading by Moody's, we expect the new notes to be priced attractively."
And in a further vote of confidence, Edcon has decided to extend the programme indefinitely - originally, it had been structured for only three years.
Consequently, OntheCards has been converted into a fully fledged, Domestic Medium-Term Note (DMTN) programme.
According to Barry Martin of Rand Merchant Bank, this is the first-ever DMTN programme in South Africa based on securitised assets. "It gives Edcon sustained, long-term access to the capital markets at very competitive rates," he says.