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Absa Capital raises R1.4bn for Edcon in the largest listed securitisation deal since January 2008

02 August 2010 Absa Capital

Absa Capital, the investment banking division of Absa Bank Ltd, acting as sole lead arranger, announced today that it had raised R1.4 billion on behalf of Edcon (Pty) Ltd (Edcon) in the largest listed securitisation deal in the South African market in two and half years.

OntheCardsII (OTCII) accessed the market with the intention to raise a minimum of R500m Class A notes. However, based on the overwhelming demand received, OTCII successfully placed R1.4bn with a total of 14 investors. The notes were issued through the OTCII structure and are backed by a portion of Edcon’s store card receivables.

Steve Binnie, Chief Financial Officer of Edcon, said: “We are delighted at the outcome of this transaction. This result certainly bears testament to the strong credit quality of Edcon and our improving operating performance.

“We are excited about the prospects for future issuance and are confident that the South African securitisation market will continue to provide a viable funding source for Edcon,” added Binnie.

The funds were raised through the combined issuance of zaAAA-rated notes: three-year (R968m) and four-year (R182m) Floating Rate Notes; and a seven-year (R250m) Fixed Rate Note. This follows the successful placement of R750m in March this year.

Both the three-year and four-year notes were placed at mid-guidance levels as compared to the March 2010 placement by OTCII. This represents a 15 basis point tightening for the three-year note and a 25 basis point tightening in the four-year note, while the seven-year Fixed Rate Note has significantly extended OTCII’s maturity profile - a clear sign of the robust health of the domestic debt capital markets.

Prasanna Nana, Head of the South African Debt Capital Markets team at Absa Capital, said: “The widespread interest in the transaction is a clear demonstration of the market’s confidence in not only Edcon as a company and its underlying asset pool, but also in well structured securitisation transactions.”

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