Sanral bond success an 'achievement'

Issued by SANRAL
Johannesburg, Sep 19, 2016

Sanral's resounding success at its monthly bond auction was a particular achievement in view of the fact that the market is in a cautious phase as a result of FutureGrowth's announced aversion to investments in state-owned enterprises, said the company's Chief Financial Officer Inge Mulder.

The auction was held on 14 September 2016.

"We received total bids of more than R1. 7 billion whilst we were asking R500 million. This means we were more than three times oversubscribed," said Mulder.

Of this, R988 million was allocated on bond HWS09 at a spread of 143 basis points.

"This is proof that we remain a solid investment, even at times when markets punish entities which are perceived differently."

The South African National Roads Agency (Sanral) prides itself on its widely recognised prudent governance which has resulted in a dozen unqualified audits.

"Today's highly successful auction has confirmed that our going concern is intact and we have sufficient cash to meet our obligation for this year and the next," says Mulder.

"Notwithstanding this we are taking seriously Moody's placing us under review. It is unfortunate that issues outside of Sanral's control have forced the ratings agency to review our rating. Pronouncements by detractors have ensured that motorists are still disobeying the laws of the country and therefore the low level of cash receipts from GFIP. The legal process is slow but will assist in confirming to users that the user pay principle is here to stay."

Sanral manages two portfolios: toll and non-toll. The toll portfolio is less than 15% of Sanral's total portfolio. The non-toll portfolio is funded through an allocation made by National Treasury.

Sanral manages the toll portfolio as a global portfolio and does not separate specific toll routes for project financing. This has stood the agency in good stead due to the strength of the whole portfolio ensuring lowest borrowing cost and optimised funding. The funds raised at the auction will be applied to road maintenance expenditure, operations and servicing of debt.