Transnet finalising plans for a R5bn global bond issue
Aggregates|Projects|Transnet|Europe|North America|Equipment|Transport|Chris Wells|Directv R15 (120 GB) DTV Receiver / 100-Hours Video Recorder|Koss R-80 Consumer Headphones|Operations
© Reuse this
South African transport utility Transnet was currently preparing the necessary documentation and fulfilling the legal requirements for a R5-billion global bond issue, acting CEO Chris Wells said on Wednesday.
However, he provided no details as to the timing of such an issuance, saying only that the group intended to enter the European and North American markets as soon as the net costs of raising foreign-market bonds became attractive again.
“We are watching it daily, and there will come a time, in the short- to medium-term, when the pricing will be right and we will issue a R5-billion or so bond into that market,” Wells said.
The State-owned enterprise (SoE) had already established a domestic medium-term note programme, which it was currently tapping at a rate of R1-billion a month and which would remain the “backbone” of its funding strategy.
“But as other South African SoEs increasingly move to tap the domestic bond market, one has to have alternative sources,” Wells said in a presentation in Sandton.
The international markets would be accessed through a so-called global medium-term note programme, but only once the “spreads” between emerging-market and developed-market debt had narrowed.
In the wake of the global financial crisis and associated credit crunch, emerging markets and their companies had been “penalised”, with investors demanding higher spreads, which had effectively shut off that source of funding to the developing world.
“The amount of funding we need . . . is intense over three years and aggregates to R27-billion,” Wells said, arguing that, while its current projections showed net surplus cash positions for the 2012/13 and 2013/14 periods, it was likely that these would not materialise as new projects were added as growth resumed.
The group is looking to tap several funding sources over-and-above the issuing of bonds, including:
- Development finance institution capital, with an African Development Bank due diligence exercise already under way;
- Loans from domestic and foreign institutions, including a deal with the Japanese Insurance Corporation, which was in place but awaiting improved rand-to-yen swap rates;
- The issuance of commercial paper for short-term funding purposes; and
- Export credit-agency finance, placed with agencies in the countries from where Transnet was importing capital equipment.
Transnet had recently recommitted itself to an R80,5-billion five-year capital programme, and had budgeted for a R12,9-billion funding shortfall in 2009/10, as it prepared to spend nearly R22-billion on capital projects in that financial year.
Capital expenditure over the next three years was being budgeted at R57,7-billion, which Wells indicated would be funded through borrowings of R28,4-billion and cash from operations of R29,3-billion.
The group spent R19-billion on capital programmes in the year ending March 31, 2009, a 22% increase on the R15,6-billion it spent in the previous year.
Edited by: Creamer Media Reporter
© Reuse this
Comment Guidelines (150 word limit)
Other Construction News
A month before it plans to list on the main board of the JSE, property group, the Pivotal Fund has posted a net asset value per share excluding deferred tax (NAVPS) for the six months ended August 31, of R15.55 – a 5.9% increase on the NAVPS at the end of the...
Steel among the five resource value-chains being prioritised
The Mineral Beneficiation Action Plan (MBAP), which is currently in draft form, should be finalised by the end of March 2015, the Department of Trade and Industry (DTI) has confirmed. The department is leading the drafting process, which also involves the National...
Construction company Group Five says its strategy is strongly focused on expansion in Africa, with selected projects in Russia and Northern America also possibly on the horizon. Outgoing CEO Mike Upton says the South African construction industry saw what appears to...
Industrialisation remains a major part of the South African developmental agenda and an important vehicle towards achieving the Department of Trade and Industry’s (DTI’s) target of creating 100 black industrialists in the next five years, Trade and Industry...
The construction of a new innovation hub in the heart of the Dube TradePort, in Durban, was set to kick off in March 2016, as Dube TradePort Corporation sealed a R160-million lease agreement with Eureka Capital. Eureka Capital planned to develop a seven-storey 21 500...
South Africa will become the first African country to host the Organisation for Economic Cooperation and Development’s (OECD’s) Steel Committee Conference when the committee’s seventy-seventh session takes place in Cape Town between December 11 and 12. The...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
JSE-listed real estate investment trust (REIT) Rebosis Property Fund achieved a distribution growth of 8.1% to 99.45c per linked unit in the financial year ended August 31, despite volatile market conditions.
The MOM incubator was designed to help babies in developing nations who were dying in conflict-struck nations or who do not receive hospital care
A low-cost, inflatable incubator won this year’s international James Dyson design award, which aims to encourage and inspire the next generation of design engineers.
The World Bank released its ‘Doing Business 2015: Going Beyond Efficiency’ report last month and ranked South Africa 43 out of 189 global economies for its ease of doing business, with Singapore topping the rankings.
Air Products South Africa officially launched its R300-million Eastern Cape air- separation unit (ASU), at its new manufacturing facility in the Coega Industrial Development Zone (IDZ), earlier this month. It is the second facility that Air Products launched in South...
BMW South Africa (SA) has signed a power purchasing agreement with energy company Bio2Watt. The offtake partnership will bring renewable energy to the carmaker’s Rosslyn plant, north of Pretoria.