MDS won’t grind to a halt – Transnet

Although both the country
and Transnet have suffered
a credit downgrading, the
parastatal seems little
concerned.
Indeed, when FTW
enquired about what this
meant to them, Transnet
spokesman Molatwane
Likhethe
sent us a
statement
headed:
“Transnet
well
positioned
to withstand
downgrade”
“The
company’s
adequate
liquidity
levels,” it
added, “will
enable it to
pursue its
funding plan,
thanks to
management’s sharp risk
management framework and
sound relationships with
financial institutions.”
Which means that
Transnet’s multi-billion rand
market demand strategy
(MDS) – aimed primarily at
port redevelopment and now
well under way in its fifth
year since its 2012 inception
– will not grind to a halt.
The statement released
to FTW included Transnet
quoting the ratings agency,
S&P Global Ratings.
“S&P,” it said, “maintained
Transnet’s stand-alone
credit profile at BBB- (still
considered investment grade
in S&P terms), ref lecting the
company’s strong financial
metrics as it executes
its multi-billion rand
infrastructure investment
programme.”
It also pointed out that:
“Transnet
continues to
raise funds on
the strength
of its own
balance sheet
and receives
no funding or
guarantees
from the
national
government.”
So SA’s
sovereign
downgrading
to “ junk”
status plays
no part in
Transnet’s
development plans.
This, as FTW expected,
encouraged Transnet group
CE, Siyabonga Gama, to pat
his management team on
the back.
He said: “S&P’s
affirmation and
acknowledgement of the
critical role that Transnet
plays in SA’s economy as
a provider of essential
infrastructure services,
is testament to the strong
and agile manner in which
Transnet management is
navigating the tough macroeconomic
challenges.”
It was also pointed
out that about 26% of
Transnet’s debt portfolio
had a credit rating clause
with a trigger below subinvestment
grade. “Between
May and November 2016,”
the Transnet statement
added, “management
proactively and successfully
negotiated with its lenders
to lower and relax the credit
rating default triggers
to below sub-investment
grade.”
Group chief financial
officer, Garry Pita, also
released what, on the
surface, are encouraginglooking
financial figures.
He said: “The company
has strong liquidity and
has secured more than R16
billion in unused shortterm
credit facilities that
are available within 24
hours, as well as long-term
specific committed funding
in excess of R15 billion.
Furthermore, the company
has access to the domestic
and global capital markets
through the domestic
medium-term note and
global medium-term note
programmes amounting
to R93 billion to meet its
funding commitments.”
In its statement,
Transnet reiterated that its
“financial fundamentals
remain strong” and its
“stand-alone profile at
investment grade” was a
strong indication of that.
INSERT
Transnet continues
to raise funds on
the strength of its
own balance sheet
and receives no
funding or guarantees
from the national
government.