Transnet secures R4bn loan from Japan
2009-03-27 · Property Infrastructure
TRANSNET said yesterday it had tapped the foreign capital market for the first time after signing a R4bn “untied loan” deal with Japan Bank for International Co-operation (JBIC), a state-owned financial institution.
Transnet acting CEO Chris Wells said the interest rate on the loan was less than the weighed average cost of Transnet’s debt and was below 12%. Having secured this foreign loan, Transnet looked set to raise more capital abroad despite the global financial crisis that has hit liquidity and raised the costs of borrowing.
“We are also in talks with similar institutions in other countries and we anticipate that we’ll reach agreements in due course,” said Wells. The group sought to raise a third of the R30bn from the foreign debt capital market, he said.
The untied loan — which came with no procurement strings attached — would be used to widen and deepen the entrance to the Durban harbour, allowing larger vessels access to the harbour.
The loan facility came at a time when Transnet was diversifying its funding options as it attempted to raise R30bn for its multibillion-rand investment plan.
“The agreement is in line with our strategy of diversifying our funding sources and raising funds cost-effectively while prudently managing liquidity risks,” said Wells. The loan would be drawn over two years and be repaid over 10 years.
Toshiro Machii, who signed the loan agreement in his capacity as JBIC’s head of finance for the Europe, Middle East and Africa regions, said the loan fulfilled the promise the Japanese government had made last year.
The JBIC is the international wing of the Japan Finance Corporation, Japan’s policy-based financing institution that has a mandate to fund projects which support Japanese companies overseas.
Several Japanese companies use Durban harbour to import or export their products. The port also serves as a gateway to SA’s neighbouring countries.
Transnet acting CEO Chris Wells said the interest rate on the loan was less than the weighed average cost of Transnet’s debt and was below 12%. Having secured this foreign loan, Transnet looked set to raise more capital abroad despite the global financial crisis that has hit liquidity and raised the costs of borrowing.
“We are also in talks with similar institutions in other countries and we anticipate that we’ll reach agreements in due course,” said Wells. The group sought to raise a third of the R30bn from the foreign debt capital market, he said.
The untied loan — which came with no procurement strings attached — would be used to widen and deepen the entrance to the Durban harbour, allowing larger vessels access to the harbour.
The loan facility came at a time when Transnet was diversifying its funding options as it attempted to raise R30bn for its multibillion-rand investment plan.
“The agreement is in line with our strategy of diversifying our funding sources and raising funds cost-effectively while prudently managing liquidity risks,” said Wells. The loan would be drawn over two years and be repaid over 10 years.
Toshiro Machii, who signed the loan agreement in his capacity as JBIC’s head of finance for the Europe, Middle East and Africa regions, said the loan fulfilled the promise the Japanese government had made last year.
The JBIC is the international wing of the Japan Finance Corporation, Japan’s policy-based financing institution that has a mandate to fund projects which support Japanese companies overseas.
Several Japanese companies use Durban harbour to import or export their products. The port also serves as a gateway to SA’s neighbouring countries.
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