Moody’s reviews South African National Roads

Moody's Investors Service said it placed South African National Roads Agency Ltd.'s (Sanral) Baa3/P-3 global and Aa3.za/P-1.za national long-term and short-term issuer ratings on review for downgrade.

The review follows the continuing deterioration of the Gauteng Freeway Improvement Project (GFIP) cash flows and rising funding challenges at a time when Sanral faces large debt maturities.

At the same time, the agency lowered the issuer's standalone credit profile (baseline credit assessment) to b3 from b2, which mainly reflects the decline in GFIP toll revenues.

Moody’s said the review reflects ongoing cash flows pressure, despite a number of interventions by the national government to encourage e-toll payments.

Road users barely used the opportunity to clear their outstanding debt during a recent six-month window to settle accumulated e-toll fees at a discount. Resistance to open road tolling remains strong, as from July 2015 to August 2016 Sanral collected on average ZAR 76 million per month, lower than the average ZAR 86 million collected during FY2014-15.

While the agency issued summonses to defaulting road users, some are preparing to defend their cases in court further delaying debt collection.

Therefore, Moody's said it expects Sanral’s cash flow pressures to persist in 2017.

© 2015 Prospect News.
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