Johannesburg – Moody’s has
confirmed the South African National Roads Agency Limited’s (Sanral’s)
long-term issuer rating at a notch above junk.
It also affirmed its South
African national scale as well as the short-term ratings P-3 (global scale) and
P-1.za (national scale).
However, Moody’s has given
the company a negative outlook because it is battling to collect e-toll income. The amount owed to it by debtors has leapt from R1.15 billion in 2014 - six months after the controversial e-tolling system came into effect in Gauteng - to R7.66 billion in the year to May.
In a statement, Moody’s
says its September 14 rating highlighted the challenges Sanral faces, which
included uncertainty over whether it would continue to access debt capital
market following ongoing cash flow pressures arising from low e-toll receipts.
“While e-toll collection
rates have not improved, Moody's confirmation of the ratings follows SANRAL's
successful R2.5 billion debt issuance in September and October. The funds
raised decreases short-term concern on Sanral’s cash flow.”
At the end of October,
Sanral had cash of R5 billion.
“While this does not
resolve the ongoing concern of Sanral’s inability to raise sufficient revenue
through e-tolls and subsequent reliance on increasing debt, which is reflected
in the current ratings and negative outlook, it does provide for near-term
security of bondholders.”
Read also: Outa scolds Sanral over e-toll debt
The second point for the review
focused on a pending decision by the South African government on Sanral’s
application to extend its borrowing limit under guaranteed debt, which was
expected at the end of November 2016, Moody’s says.
This decision has been
postponed, with a decision now expected in the first quarter of next year 2017.
However, Moody's notes that the R1 billion bond issued on September 13 was three
times oversubscribed, an indication that SAnral’s access to the capital market
was not jeopardised following some signals of increased risk aversion by
funding counterparties, owing to market concerns regarding the governance of
South African state-owned enterprises. The bond spreads were in line with other
recent Sanral issuances.
Moody’s says Sanral’s debt should
stay within the projected debt limit.
Sanral has not commented apart from to draw attention to the ratings review.