S&P puts Transnet SOC on watch

S&P said it placed its ratings for Transnet SOC Ltd. on CreditWatch with negative implications.

“Transnet's liquidity has deteriorated since our previous review in November 2020, and could be revised down to weak if acute refinancing risks are not resolved in the next three months,” S&P said in a press release.

Transnet’s revenue and S&P Global Ratings-adjusted EBITDA declined 10.4% and 44.9% respectively in fiscal year 2021 ended March 31, 2021. The agency said it projects revenue and EBITDA recovering 10% to ZAR 74 billion and 45.3% to ZAR 28 billion, respectively in FY2022, but still below FY2020 levels of ZAR 75 billion and ZAR 33 billion.

“The CreditWatch negative indicates that we could lower all our ratings (except on the government-guaranteed issue), potentially by multiple notches, if Transnet is unable to make significant progress toward obtaining covenant waivers, refinancing its upcoming debt maturities, and bolstering its liquidity levels in the next three months, which could notably also affect our view of a very high likelihood of government support,” S&P said.

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