State covers all Sanral debt

Publication: Business Report

Author: Bloomberg

A toll gate on the N1 North just before the Beyers Naude offramp in Gauteng. Photo: Dumisani Sibeko

The SA National Roads Agency Limited (Sanral) has sold R20 billion of bonds since 2008, half of which is backed by the state, to build the Gauteng Freeway Improvement Project. It intended to use tolling revenue to repay debt and interest.

Tolling, due to start next month, was postponed last week following public opposition, leading Sanral to cancel its March bond auction.

“The debt will be paid,” said Logan Maistry, the spokesman for Transport Minister Sbu Ndebele. “As government, we are committed to meeting all obligations to all the stakeholders. The Sanral board is exploring different modalities and will present its findings to the minister.”

Moody’s Investors Service placed Sanral on review for a possible rating cut last week, saying the decision to delay tolling would pressure cash flows. The state-owned agency had enough cash to meet operating and debt servicing costs until June, Moody’s analyst Kenneth Morare said.

Its bonds are rated A3, equal to those of South Africa. It holds R29.8bn of bonds, R1.86bn of which matures in 2013 and R1.34bn in 2014.

The extra yield investors demand to hold the agency’s R4.1bn of 12.25 percent notes due 2028, widened to 1.1 percentage point on Friday.

Sanral communications manager Priya Pillay did not respond to requests for comment. – Bloomberg