Water utility Rand Water has settled its RW23 bond under its R10-billion domestic medium term note (DMTN) programme, which was listed with the Johannesburg Stock Exchange (JSE) in 2013 and matured on December 10.
The utility settled the last coupon of this bond and the principal amount of R1.23-billion on December 11.
“The bond settlement is achieved through prudent financial management and strict Public Finance Management Act adherence that Rand Water applies in its finance management and strict financial discipline through its board-approved Corporate Treasury Policy to mitigate the possible refinancing risks,” said Rand Water CEO Sipho Mosai on Monday.
Speaking at the JSE bond delisting event, which was attended by Water and Sanitation Minister Senzo Mchunu and Rand Water chairperson Ramateu Monyokolo, besides others, Mosai said that Rand Water had successfully invested the redemption reserve funds in investment instruments that yielded a competitive return averaging 9.15%.
The bond redemption was not Rand Water’s first: it also successfully redeemed the RW21 bond in April 2021 and plans to redeem RW28 in 2028.
Rand Water uses bonds and a mixture of bilateral long-dated loans from assets managers, development finance and banking institutions to meet its external funding requirements when necessary and for its infrastructure programmes.
This included the company’s Phase 1 of Station 5A, adjacent to the existing Zuikerbosch water treatment plant, the commissioning of which added 150-million litres a day of water into the system. By the end of 2024, the second phase will add another 450-million litres a day, bringing total supply to 600-million litres a day.
Further, also as part of Rand Water’s upgrading and wide-range augmentation strategy to ensure sustainable future water supply to its customers, the company unveiled the 210-million-litre Vlakfontein reservoir in February.
Rand Water has steadily been increasing its operational capacity, with its distribution network of large diameter pipelines increasing from 3 500 km in 2012 to 3 660 km in 2023, and the number of service reservoirs increasing from 58 to 60 in the same period.
In 2012, the utility supplied 4 205-million litres a day of potable water, rising to 4 520-million litres a day currently.
The water utility intends to use its solid financial position to measure, build and create future sustainability as bond settlement serves as a catalyst towards retaining investors’ confidence.
The redemption of the bond coincides with Rand Water's celebration of its 120 years of existence and the unveiling of its 2022/23 Integrated Annual Report, which was launched and submitted to Rand Water shareholder, Mchunu, on November 14 during the annual general meeting.
At the time, Mchunu commended Rand Water for improved financial performance and profitability amid negative headwinds; a healthy balance sheet and a strong liquidity and solvency position.
Also in November, Fitch Ratings affirmed Rand Water’s credit rating of 'AA+' positive outlook.
Meanwhile, the Department of Water and Sanitation awarded Rand Water a Blue Drop score of 97% excellence following its technical site assessment of Rand Water’s Vereeniging water treatment works.
“Rand Water prides itself on providing high-quality water to more than 16-million people in Gauteng and surrounding provinces by adhering to legislative requirements as stated in the South African National Drinking Water Standard, or SANS241,” Mosai said.
Rand Water, benchmarking its water quality against World Health Organisation guidelines, implements a water quality management system, which integrates all aspects of water quality management across all its operational and maintenance teams.
The City of Johannesburg, City of Ekurhuleni and Midvaal local municipality, along with Rand Water, performed well during the recent Blue Drop audit.