| Mon 14 Nov 2011, 11:52 | | TRA - Transnet SOC Limited - Moody`s changes outlook on Transnet`s A3/P-2 |
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TRA - Transnet SOC Limited - Moody`s changes outlook on Transnet`s A3/P-2
rating to negative from stable (South Africa)
TRA - Transnet SOC Limited
JSE Code: TRA
Moody`s changes outlook on Transnet`s A3/P-2 rating to negative from
stable (South Africa)
This is one of two rating actions on South Africa`s corporate government-
related issuers (GRIs) which are being announced separately.
RATINGS RATIONALE
Moody`s decision to change the outlook on Transnet`s ratings to negative
was driven primarily by the change in outlook on South Africa`s
government bond ratings, but also by the overall execution risk of its
significant capex programme over the next five years, as well as the
potential pressure to accelerate its current capital expenditure
programme. In the past years, though, Transnet has successfully
implemented over 90% of its budgeted capital investment program.
Transnet`s A3/Aa3.za/Prime-2 ratings remain unchanged. The company`s A3
rating reflects the combination of the following inputs: (a) a Baseline
Credit Assessment (BCA) of 7 (equivalent to an A3 rating on the long-term
scale), (b) the A3 local currency government rating for South Africa, (c)
very high dependence, and (d) high support. The lack of uplift to
Transnet`s BCA reflects the assumed high default correlation between
Transnet and South Africa`s sovereign rating, so that uplift above the
rating of South Africa is not considered appropriate. At the same time,
the very high dependence of Transnet on the South African government
largely explains why the negative outlook on the South African sovereign
rating has an impact on Transnet`s outlook as well. While the government
support does not currently provide any uplift to Transnet`s ratings,
Moody`s nevertheless expects it to mitigate to some extent any potential
decline in Transnet`s creditworthiness.
In Moody`s view, the key credit factors that are likely to impact
Transnet`s standalone credit profile (or its BCA) over the next few years
are (1) the potential increase in debt that will be needed to meet the
large capex plans in the event that they are substantially increased as
part of possible government stimulus measures; and (2) the tariffs that
Transnet will be able to charge to recover the cost of such increased
capital spending.
For full details please refer to http://www.moody`s.com /research/Moody`s
-changes-outlook-on-South-Africa-A3-government-ratings-to PR-230435.
Transnet SOC Ltd Carlton Centre P.O. Box 72501
Registration 150 Commissioner Parkview, Johannesburg
Number Street South Africa, 2122
1990/000900/06 Johannesburg T +27 11 308 2313
2001 F +27 11 308 2315
Directors: ME Mkwanazi (Chairman) B Molefe* (Group www.transnet.n
Chief Executive) NK Choubey# MA Fanucchi Y Forbes HD et
Gazendam NBP Gcaba MP Malungani BD Mkhwanazi T Mnyaka
N Moola MP Moyo NR Ntshingila IM Sharma IB Skosana E
Tshabalala DLJ Tshepe A Singh* (Acting Chief Financial
Officer)
*Executive #Indian
Group Company Secretary: ANC Ceba
14 November 2011
Sponsor :
Transnet SOC Limited
Date: 14/11/2011 11:52:00 Produced by the JSE SENS Department.
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