Lenders agree to relax downgrade triggers
South Africa’s freight logistics utility, Transnet, has reached agreement with the majority of its lenders to relax covenant triggers in respect of its R30.1-billion debt. These triggers would otherwise be brought into play in the event that South Africa is downgraded to junk in December.
Transnet’s credit rating is currently pegged at investment grade, but is inextricably linked to that of the sovereign, owing to the fact that it is wholly State-owned. Therefore, any downgrade of South Africa to subinvestment grade would also result in Transnet being downgraded.
CFO Garry Pita stressed that the move did not imply that Transnet believed that South Africa would definitely be downgraded. “In fact, quite the opposite — we don’t believe that there will be a downgrade.”
Nevertheless, the group is preparing for “any eventuality”.
Transnet currently has debt of R127-billion, but the triggers apply to only R30.1-billion of that debt.
Pita noted, too, that Transnet had raised debt on the strength of its own balance sheet, having last had a government guarantee in 1999.
“We have gone to our lenders that have triggers in our arrangement that say that we potentially have to pay back that R30.1-billion, or [face] increased finance charges. We have said that, on the strength of our balance sheet and on the back of our strong standalone credit profile, they should relax those triggers to below junk status.”
He reported that 96% of lenders had agreed and that it was finalising the paperwork with the rest.
“That would mean that, if the sovereign were to be downgraded, Transnet would have mitigated that risk.”
Article Enquiry
Email Article
Save Article
Feedback
To advertise email advertising@creamermedia.co.za or click here
Research Reports
Projects
Latest Multimedia
Latest News
Showroom
For over 30 years, Werner South Africa Pumps & Equipment (PTY) LTD has been designing, manufacturing, supplying and maintaining specialist...
VISIT SHOWROOM
For over 15 years, Lilak Aluminium, a trusted leader in architectural extrusion supply, has delivered excellence to businesses like yours.
VISIT SHOWROOM
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation
