Transnet may receive govt guarantee for borrowing amid financial concerns

TRANSNET may receive a government guarantee for its borrowing from commercial banks; however, no direct bailout is currently envisaged, according to the Treasury - global rating agency Moody's recently warned Transnet could run out of money within three months.

- HELMO PREUSS

"Today's rating action reflects our growing concern over Transnet's unsustainable capital structure, its deteriorating liquidity position, the lack of a formal agreement so far on additional government support, and the slower-than-planned pace of operational improvements," the rating agency stated.

Moody's also said that, although the government provided a R47 billion guarantee facility in December 2023, this funding has been fully exhausted.

"We believe the government remains supportive of Transnet and will provide additional guarantees or other assistance to prevent default on its upcoming debt maturities. However, the lack of a formal announcement so far creates uncertainty and heightens default risk," Moody’s added.

Transnet reported that bulk export volumes grew by 15.9% year-on-year in March as it delivers on its turnaround strategy. Statistics South Africa reported that rail transport payload fell by 12% in 2022, following a 6.9% fall in 2021 and an 11.1% drop in 2020.