Moody’s views South Africa’s plan to introduce a new class of loss-absorbing debt, part of its bank-resolution framework, favorably for senior creditors. This proposal requires systemically important South African banks to accumulate a layer of these instruments, known as flac, to aid recapitalization during crises. The flac requirement is estimated to be between 288 bln rand and 360 bln. Banks are expected to fulfill 60% of this requirement by the end of 2027 and the entire amount by the end of 2030, with implementation starting in January 2025.