Transnet to sell first international bonds in over a decade

Transnet SOC Ltd., which operates South Africa’s ports and freight-rail network, has started a new $6 billion bond sale program in its first foray into international capital markets in more than a decade. 

The company said it’s planning to soon sell a dollar-denominated note that will account for part of the total. The initial bond will be of five-year tenure and investor meetings ahead of the sale began on Thursday, 

The sale comes after the state-owned company breached financial covenants on loans in its last financial year as the amount of coal it moved on the country’s main export line plunged to the lowest in about three decades. It had a cash-to-interest ratio of 2.1 compared with the 2.5 cover ratio required on some of its debt, it said. 

The last bond priced at 265.5 basis points over 10-year treasuries when the company’s was rated as A3, investment grade, by Moody’s Investors Service. It’s now rated at Ba3, sub-investment grade.

Standard Bank Group Ltd., Absa Group Ltd. and JPMorgan Chase & Co. will act as bookrunners for the transaction. Standard Bank and Absa declined to comment and JPMorgan didn’t immediately respond to emailed questions.