Transnet to issue dollar bond

• State port and rail operator holds investor meetings to sell $6bn issue

Transnet plans to issue a dollardenominated bond to fund debt repayment obligations as well as general capital and operational investments. Business Day reported in December that Transnet faced two bond repayments due in February worth a combined R1.088bn.

Transnet plans to issue a dollardenominated bond to fund debt repayment obligations as well as general capital and operational investments.

The state-owned port and rail operator confirmed to Business Day that it was holding a series of investor meetings on Thursday to sell a five-year dollar bond under a new $6bn Global Medium Term Note Programme (GMTN).

Bloomberg News had earlier reported the planned foreign currency bond issuance, citing people familiar with the matter.

Transnet, rated Ba3 by Moody’s and BB- by Standard & Poor’s, mandated Absa, JPMorgan and Standard Bank as joint bookrunners. It held a call with global and other investors on Thursday. Its decision on when to issue the debt note will be subject to market conditions.

Business Day reported in December that Transnet was facing two bond repayments due in February worth a combined R1.088bn. The total amount relates to R556m in bonds maturing on February 7 2023 and another R532m of debt instruments that are due to be repaid on February 13.

“We can confirm that the GMTN is under way, as part of the company’s funding programme; this is a new series,” Transnet said in a statement. “The proceeds will go towards funding redemptions, as well as capital and operational investments.”

The planned issuance comes as SA’s coal exports plunged to a record low.

Shipments via the Richards Bay Coal Terminal (RBCT) fell to

about 50-million tonnes in 2022, the lowest since 1993, when it shipped 51-million tonnes, RBCT CEO Alan Waller said at the annual results presentation

on Thursday. The drop was attributed directly to the low availability of locomotives and cable theft that has disrupted Transnet Freight Rail (TFR) volumes to the terminal. It coincided with an increase in coal export prices over the past two years of roughly 400%.

Transnet has been under mounting pressure in recent months from market critics as well as the mining industry over the impact of its creaking infrastructure on mineral exports.

Earlier this month Minerals Council SA called for the axing of two senior Transnet leaders, including CEO Portia Derby, citing what it called the “catastrophic impact” that the company’s alleged dysfunction was having on the mining industry.

In a confidential letter dated December 4 2022, the Minerals Council, which speaks for the country’s biggest mining companies, said the worsening operational performance at Transnet demanded urgent action.

The letter also called for the removal of Sizakele Mzimela, who heads Transnet’s freight rail division and said Minerals Council “members had lost confidence in the company’s leadership.

THE PROCEEDS WILL GO TOWARDS FUNDING REDEMPTIONS, AS WELL AS CAPITAL AND OPERATIONAL INVESTMENTS