Page 170 - 5.2 i. Manac Finance ITC Summarised Notes

THE FINANCING DECISION

Additional considerations when using foreign finance

• A South African business using foreign finance has

to take cognisance of additional considerations,

including:

• foreign exchange risks and associated cost of hedging

this risk.

• South African Reserve Bank requirements.

• credit rating agency reviews and ratings (This is normally

only required where credit risk is not intrinsically

assessed by the debt provider, such as a foreign bank.

An example where it may be necessary is before a

foreign bond issue; this function is then typically
performed by one of the three main rating agencies,

which are Standard & Poor’s, Fitch and Moody’s.)

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