South Africa’s Transnet raises $853m syndicated loan to fund locomotive acquisition programme

South African freight transport and logistics company Transnet has raised R12 billion ($853 million) through a syndicated loan to to fund its locomotive fleet acquisition programme.

Transnet has spent an unmatched R108.9 billion ($7.7 billion) in its rail, ports and pipelines infrastructure since it launched its infrastructure investment programme – the Market Demand Strategy (MDS) in 2012. “This will improve to R125 billion by the end of the current financial year,” a statement by the company said.

The state-owned firm, whose wagons transports commodities such as coal, iron ore and fuel, has continued to expand amid slowing growth in South Africa, the continent’s most advanced economy.

Transnet said the money would be raised from five major financial institutions that include Nedbank, Barclays Africa Group, Bank of China and the asset management arm of insurer Old Mutual. A $1.5 billion loan facility had also been agreed with China Development Bank (CDB) in June this year. The company has an option to increase the CDB facility to $2.5 billion as part of an agreement between China and South Africa.

Funds have also been raised from Export Development Canada [R6.992 billion($497 million)], KFW Development Bank (R2.760 billion) and US Exim [R6 billion($426 million)].

“Transnet continues to raise funds on the open markets on the strength of its balance sheet, with a standalone investment grade credit rating, and does not rely on the fiscus for any funding or guarantees,” the company said.

“The remainder of the capital investment programme is funded through cash generated from operations.”