{"id":9885,"date":"2022-02-02T07:28:22","date_gmt":"2022-02-02T07:28:22","guid":{"rendered":"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2"},"modified":"2022-02-02T08:10:47","modified_gmt":"2022-02-02T08:10:47","slug":"south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2","title":{"rendered":"South Africa: Transnet faces an uphill battle to refinance $1bn in 2022"},"content":{"rendered":"

Africa-Press – Mauritius. <\/strong><\/span>Corporate governance failings mean that South African ports and railways company Transnet is likely to have to pay extra to refinance $1bn in debt maturing in 2022.<\/p>\n

The state-owned company has a monopoly on South Africa\u2019s railway infrastructure and freight services as well as being a port landlord. In November, it issued a request for proposals for a lead arranger to refinance its 4% 2022 eurobond maturing in July.<\/p>\n

Transnet lost 8.4bn rand ($520m) in the year to March. CEO Portia Derby this month told parliament that it may be late 2022 or 2023 before financial performance improves.<\/p>\n

\u201cIt\u2019s going to be difficult,\u201d to refinance, says Lelethu Poswa, a fixed-income analyst at Anchor in Cape Town.<\/p>\n

He cites the delayed release of financial statements, several covenant breaches, negative sentiment towards state-owned enterprises (SOEs) and a series of qualified audit opinions.<\/p>\n

These episodes have \u201climited Transnet\u2019s ability to access the local and international debt capital markets to refinance in a timely manner. \u201d Poswa says there is a \u201chigh probability\u201d of a government support for Transnet if needed.<\/p>\n

Yet, he notes, the government faces increasing fiscal pressures which compromise its ability to provide timely and adequate support to SOEs, as shown by the Land Bank default. Transnet needs to take a range of steps to become more attractive as a borrower, Poswa says.<\/p>\n

These are achieving an unqualified audit opinion; lengthening its debt-maturity profile; improving its liquidity; putting emphasis on maintenance capital expenditure and limiting operational disruption due to cyber-attacks and fire.<\/p>\n

Still, Poswa says, Transnet has a good refinancing track record through diversified funding sources. The company also has strong relationships with supportive bank lenders, he adds.<\/p>\n

\u201cIn my opinion they will be able to secure new financing agreements, but at a higher cost.<\/p>\n

Given the upcoming maturity, recent credit downgrades and poor financial performance across SOEs, there is a \u201cheightened risk of default,\u201d says Bongisipho Mahlathi, fixed-income portfolio manager at Balondolozi Investment Services in Johannesburg.<\/p>\n

\u201cThe market might be reluctant to provide liquidity to Transnet, she says, adding that the risk of new Covid-19 lockdowns may further derail financial performance.<\/p>\n

Mahlathi says that Transnet has \u201csolid partnerships with the private sector which should help stabilize the entity. \u201d Lack of Control Moody\u2019s in November downgraded Transnet\u2019s corporate family rating to Ba3 from Ba2, with a negative outlook.<\/p>\n

The ratings service cited Transnet\u2019s worsening liquidity profile and corporate governance weaknesses that have not been sufficiently addressed. These failings include repeated delays in publishing audited financial statements, qualified audit opinions and breaches of debt covenants, Moody\u2019s said.<\/p>\n

The $1bn bond maturity in July is only part of the problem. Moody\u2019s estimates that in the 12 months to September, Transnet will have total debt maturities of about $1.4bn, as well as several billion rand already drawn under the company\u2019s short-term liquidity facilities.<\/p>\n

\u201cTransnet will not be able to meet most of these maturities from free cash flow,\u201d Moody\u2019s says. Edward-John Bottomley, an analyst at REDD Intelligence in Cape Town calculates that the company faces maturities of $2.4bn for the period 2023-2026.<\/p>\n

Moody\u2019s also pointed to Transnet\u2019s status as an SOE, meaning it is subject to oversight of the Treasury and the auditor general. That means decision-making processes are \u201clengthy and outside of the company\u2019s control,\u201d Moody\u2019s said.<\/p>\n

That\u2019s a recurrent pattern in South African SOEs. State-owned power provider Eskom has argued that the slowness of Treasury procurement decisions is one of the factors hampering its performance.<\/p>\n

For More News And Analysis About Mauritius<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Mauritius. Corporate governance failings mean that South African ports and railways company Transnet is likely to have to pay extra to refinance $1bn in debt maturing in 2022. The state-owned company has a monopoly on South Africa\u2019s railway infrastructure and freight services as well as being a port landlord. In November, it issued […]<\/p>\n","protected":false},"author":84,"featured_media":9884,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5,6,8,16],"tags":[233,245,1410,241,482],"class_list":["post-9885","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-files","category-homepage-english","category-twitter","tag-africa-press","tag-africa-press-mauritius","tag-company","tag-mauritius","tag-south-african"],"yoast_head":"\nSouth Africa: Transnet faces an uphill battle to refinance $1bn in 2022 - Mauritius<\/title>\n<meta name=\"description\" content=\"Corporate governance failings mean that South African ports and railways company Transnet is likely to have to pay extra ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Africa: Transnet faces an uphill battle to refinance $1bn in 2022\" \/>\n<meta property=\"og:description\" content=\"Corporate governance failings mean that South African ports and railways company Transnet is likely to have to pay extra ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2\" \/>\n<meta property=\"og:site_name\" content=\"Mauritius\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2022-02-02T07:28:22+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-02-02T08:10:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/mauritius\/sites\/61\/2022\/02\/img-61fa3c69d4f26.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"732\" \/>\n\t<meta property=\"og:image:height\" content=\"419\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/mauritius\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"South Africa: Transnet faces an uphill battle to refinance $1bn in 2022\",\"datePublished\":\"2022-02-02T07:28:22+00:00\",\"dateModified\":\"2022-02-02T08:10:47+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2\"},\"wordCount\":604,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/mauritius\/sites\/61\/2022\/02\/img-61fa3c69d4f26.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Mauritius\",\"company\",\"Mauritius\",\"South African\"],\"articleSection\":[\"all news\",\"economy\",\"files\",\"homepage-english\",\"twitter\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2\",\"url\":\"https:\/\/www.africa-press.net\/mauritius\/all-news\/south-africa-transnet-faces-an-uphill-battle-to-refinance-1bn-in-2022-2\",\"name\":\"South Africa: Transnet faces an uphill battle to refinance $1bn in 2022 - 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