Page 11 - PowerPoint Presentation
P. 11
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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