Moody's eyes Transnet for downgrade

Moody's Investors Service said it placed most of Transnet SOC Ltd.'s ratings on review for downgrade. The ratings being reviewed include the company's Ba3 corporate family rating and the Ba3 senior unsecured rating. The outlook has been changed to ratings under review from negative.

Moody's noted it is increasingly concerned over the company's exposure to weak liquidity management and high refinancing risk. Transnet has a $1 billion international bond due on July 26, which was fully cross-currency hedged at the time of issuance, and does not have sufficient committed liquidity sources to repay this maturity.

“The company has plans to redeem the bond with a new $1 billion international bond issuance before maturity; however, Moody's believes a sufficiently large international bond issuance prior to the July maturity is becoming increasingly challenging given current market conditions. Moody's nevertheless believes the risk of default in July remains low as Transnet is in advanced stages of securing binding commitments for credit facilities with a diverse group of lenders, which Moody's believes will be available before the July 26 maturity,” the agency said in a press release.

“Moody's also continues to believe in strong support from the South African government in case it would be required,” the agency said.

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