State-owned freight logistics group Transnet said its $1-billion, ten-year bond issued on Friday following recent road shows to Europe and the US had been “significantly oversubscribed” – it did not immediately indicate the level of oversubscription.
The bond attracted an interest rate of 4.0%, or 262.5 basis points above the 10-year US Treasuries, and was the group’s single-largest issuance without a government guarantee.
CE Brian Molefe said that, besides being “competitively priced”, the tenor was also the longest for a Transnet bond issued on the international debt capital markets.
He added that the appetite for the bond demonstrated confidence in Transnet’s recently announced R300-billion market demand strategy (MDS) to expand and modernise railways, harbours and pipelines infrastructure in South Africa.
About 70% of the funding for the MDS would be secured from operating cash flows, but Transnet would still have to raise R86-billion between now and 2019 to fund the programme.
It would seek to tap a range of instruments and markets, including the domestic and international capital markets, development finance institutions and commercial banks.