Johannesburg, South Africa — 28 June 2013 – South African state-owned rail and ports operator Transnet SOC Limited plans to issue a rand bond in international markets this year to finance the US$30.93 billion infrastructure programme it launched last year to improve and expand the growth of the country’s bulk mineral exports.
Bloomberg News quotes Transnet chief financial officer Anoj Singh as saying in an interview here that “from Transnet’s perspective, the fact that the rand is sitting at 10 to the dollar means we get more rand for every dollar we raise. And if you look at it from an investor perspective, they have an ability to take a currency play.”
The bond will be the equivalent of US$500 million to US$1 billion as the company aims to triple the size of its global medium-term note programme to US$6 billion. The maturity of the bond will be from five to 10 years and it will go toward Transnet’s total funding requirements of US$8.7 billion for the years through fiscal 2019.
The rand has declined 15% this year, making it the worst performer of 16 major currencies tracked by Bloomberg. The currency strengthened for the first time in three days yesterday, advancing 1.5% to R9.9553 per dollar. Yields on the 10.5% government bonds maturing in December 2026 fell for a third day, declining 27 basis points to 7.878%.
“We’ve got benchmarks already but they are not in rand, they are in U.S. dollars,” Singh said. “The fact that we’re issuing a rand bond for the first time in an international market, yes it will be our benchmark.”
Transnet is spending R308 billion over a seven-year period to improve South Africa’s ports and rail infrastructure, with almost 75% being allocated to rail. These improvements will play a significant role in the growth of South Africa bulk mineral exports.
Profit for the 12 months through March rose to R4.34 billion rand, compared with R4.12 billion rand a year earlier, CEO Brian Molefe told reporters. Revenue advanced 9.4% to R50.2 billion.
Standard and Poor’s reaffirmed Transnet’s rating at BBB-while Moody’s Investors Service Inc. rates the company as A3-.
Source: Bloomberg News. For more information, click here.