Transnet SOC Ltd., South Africa’s state-owned ports and rail operator, agreed to a $2.5 billion loan from China Development Corp. to build locomotives in Africa’s most industrialized economy.
The loan will be payable over 15 years, with a first tranche of 18 billion rand ($1.5 billion) to be drawn over the first four years, Acting Chief Executive Officer Siyabonga Gama told reporters in Cape Town on Thursday. The funding will be enough to cover about 60 percent of the 50 billion rand needed to build 1,064 trains, he said.
“Including this agreement, Transnet has secured 92 percent of the required funding,” Gama said.
Transnet is in the third year of a seven-year, 312.2 billion-rand plan to increase South Africa’s rail and port capacity, and funds about a third of capital spending from borrowings and the rest from cash flow.
Gama said April 28 the company was urgently seeking debt sales amid the risk that rising U.S. interest rates would curb demand for emerging market assets.