Protest Stalls Morgan Issue for S. Africa

J.P. Morgan & Co. is reexamining a planned Eurobond issue for a South African development trust after the country's African National Congress condemned the financing.

"It's still up in the air until there is some clarification from the ANC," a Morgan spokesman said Wednesday. "We've had conflicting statements from the ANC, and we hope some of them can be resolved."

However, the ANC said in press release that there was no misunderstanding and that its objections had been made clear in a letter sent to J.P. Morgan officials.

The anti-apartheid organization charged Tuesday that the $100 million offering of securities would undermine the remaining international financial and economic sanctions against the South African government.

Private Placement Was Set

The issue, which Morgan planned to distributed in Europe and the United States under the private-placement provisions of rule 144-a, represents the second international bond offering for a South African institution after six years of financial sanctions against that country for its racial policies.

The offering is planned by the Independent Development Trust, a government-funded agency providing low-income housing and urban development financing in South Africa.

Although the U.S. government lifted sanctions in July, opponents of the South African government have continued to press Morgan and other U.S. money-center banks to break off all ties to that country.

"The granting of loans to the trust will undermine the financial sanctions which remain an important part of the sanctions campaign against apartheid," the ANC said in its statement.

Response Called Adequate

A J.P. Morgan spokesman said that, despite the dispute, his bank was "already seeing a reasonable response" to the bonds from investors in Europe.

Proceeds of the bonds, which are guaranteed by the South African government, would help provide schools, clinics, and water supplies in South Africa.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.