Transnet Plans Tripling Foreign Borrowings to $6 Billion

Transnet SOC Ltd., South Africa’s state-owned ports and rail operator, wants to triple foreign borrowing limits to finance infrastructure projects in the continent’s biggest economy.

The utility has asked to raise the limit to $6 billion from a current $2 billion and will find out if this has been approved after September, Transnet’s Chief Financial Officer Anoj Singh said by mobile phone on May 31. The current facility of $2 billion has an outstanding balance of $250 million, he said.

Transnet’s is rolling out a new funding strategy that includes lengthening the debt maturity and issuing debt without state guarantee. The company is spending 300 billion rand ($30 billion) over seven years to improve port facilities and railways in South Africa, with 86 billion rand expected to come from local and foreign markets.

The utility will maintain the plans to raise 60 percent of funding requirements in the domestic market and the difference through international bonds, Singh said.

Transnet today postponed the listing of debt due in June 2035, JSE Ltd., which manages South Africa’s stock and bond exchanges, said in an e-mailed statement. The company had planned to sell as much as 750 million rand of bonds due that year today, according to note e-mailed by Standard Bank Group Ltd. (SBK), which is arranging the sale.

The debt would be Transnet’s longest-dated, according to data compiled by Bloomberg. The bonds will be priced to yield as much as 110 basis points over rand-denominated government debt that’s due in March 2036, has a coupon rate of 6.25 percent and yields 8.36 percent.

“We have always been trying to extend the Transnet yield curve,” Singh said. “We now find the opportunity to issue such.”

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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