STATE-run rail and logistics company Transnet will be going on a “nondeal road show” before June to speak to investors in the international market about a possible bond issue, says CEO Brian Molefe.
Despite saying a bond issue in the international market was “overdue”, he said Transnet would wait for stability in the markets before issuing another global bond.
In 2013, Transnet issued a R5bn global bond listed on the London Stock Exchange. The bond was the first African-local currency bond to be listed in the international capital markets.
The successful global bond issue followed road shows by Transnet in the UK and North America. Transnet said the bond issue was in line with its funding strategy to diversify funding sources while lowering its average cost of debt.
Transnet had issued the bond on the strength of its balance sheet without government guarantees.
Last week Transnet announced that it had secured R6bn in funding guarantees from export credit agency the Export-Import Bank of the US for the funding of the diesel locomotives the company is acquiring from General Electric (GE).
The locomotives are part of a R50bn deal Transnet finalised with four international manufacturers to procure 1,064 locomotives. The other manufacturers include Bombardier, China North Rail and China South Rail.
Transnet described the deal as an affirmation of credit-worthiness and South Africa’s attractiveness as an investment destination, from the international community.
“The spreads have been wide,” Mr Molefe said this week. “We want to wait for the markets to stabilise.” He was speaking on the sidelines of the official opening of the third and fourth berth at Ngqura Container Terminal in Port Elizabeth, Eastern Cape on Monday.
The investment amounts to R2bn and includes the building and deepening to 16m of the terminal’s two additional berths and purchase of port equipment.
Transnet said it had invested about R12bn in Ngqura over the past three years. The terminal was opened five years ago.
Mr Molefe said R30bn had been earmarked for rail and port investments in the Eastern Cape over the next seven years. This would be part of Transnet’s R300bn market demand strategy leading up to 2019.
Ngqura, a transhipment terminal, handles about 17,000 containers a week coming mainly from Europe en route to East Africa, West Africa, South America and the Far East. The investments in the two berths have increased operating capacity at the terminal to 1.5-million containers from 800,000 containers at present.
Transnet said there was capacity for 12 berths at Ngqura although these were long-term plans.
Ngqura is the largest transhipment terminal and the second largest port in the country, according to Transnet. Durban Port, which is an import and export terminal, handles about 1,6-million containers a week and is the largest port in the country.
Public Enterprises Minister Lynne Brown said the investment in new equipment and maintenance as Ngqura served as a “lesson for other state-owned enterprises”.
“Always have a reserve because if you have a reserve, you will have provision for any eventuality,” she said. Ms Brown said the terminal also “ticked off crucial boxes” in government’s developmental agenda while boosting the Eastern Cape’s role in the broader economy.