Johannesburg - The South African National Roads Agency Limited (Sanral) hopes to resume its normal monthly bond auctions “in the next month or two”.
Sanral only managed to raise R400 million of the R600m it was hoping to raise in its bond auction in February. To date, it has not held any further bond auctions.
The agency confirmed in May that it would be embarking on a roadshow to try and win back support from investors for its bonds following the recent e-toll tariff dispensation announced in Gauteng.
Inge Mulder, Sanral’s chief financial officer, said yesterday the agency had “very robust” discussions with its investors and hoped to resume its normal monthly auctions “in the next month or two”.
Ratings agency Moody’s Investors Service last week affirmed Sanral’s existing credit rating but indicated the outlook remained negative.
The negative outlook implies that yet another downgrade might be on the way, which would increase the cost of funding. Moody’s has downgraded Sanral’s ratings three times since February 2012.
Mulder said Sanral was satisfied it was able to show the ratings agency it was still rated correctly but it would like to improve on this rating in the near future.
“The affirmation means, even though Sanral is still on a negative outlook, the ratings have not been changed and we stay where we are. Therefore, we have been able to avert a possible downgrade, and our bonds are still investment grade.
Positive
“This is of course positive for Sanral’s ability to continue raising debt, when required. The affirmation will not change the programme itself,” she said.
Moody’s indicated last week that the government commitment to support Sanral was key to it affirming Sanral’s existing credit rating and its ratings incorporated “a very high probability of extraordinary support from the central government should the company face acute liquidity stress”.
“This assumption reflects the strategic role of the company, as highlighted by the government’s explicit guarantee on 76 percent of its total debt and an implied guarantee on the remaining 24 percent.”
Moody’s said the inability to effectively enforce e-toll payments, leading to deteriorating cash flows and increased borrowing needs, would apply downward rating pressure on Sanral while any indication of a loosening of the government’s willingness to support Sanral “would likely lead to a downgrade”. A stabilisation of Sanral’s outlook would require evidence of its ability to enforce payments and a substantial improvement in its revenue collection, it said.
Moody’s said Sanral’s substantial debt level increased to R46.4 billion in 2014/15 from R39.6bn at the end of 2014, largely driven by a sharp decline in e-toll collections and higher borrowing needs, and expected it to remain at about R46bn in 2016/17.
Sanral refinanced a bond that matured in April and previously indicated it would refinance three other bonds worth about R2.5bn that would mature next month.
BUSINESS REPORT