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\t\t<\/span><\/p>\n <\/span><\/p>\n \n \t\t\u00a9 Thomson Reuters 2012 All rights reserved<\/p>\n","protected":false},"excerpt":{"rendered":" Overview — On Oct. 12, 2012, we lowered our foreign currency sovereign ratings on the Republic of South Africa to ‘BBB\/A-2’ from ‘BBB+\/A-2’ and the local currency sovereign ratings to ‘A-\/A-2’ from ‘A\/A-1’. — We consider South African infrastructure provider Transnet SOC Ltd. (Transnet) to be a government-related entity (GRE) under our criteria and assess […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[830,2370,183],"class_list":{"0":"post-15632","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-south-africa","7":"tag-news","8":"tag-reuters","9":"tag-south-africa-2","10":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/15632","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=15632"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/15632\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=15632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=15632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=15632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Overview\n -- On Oct. 12, 2012, we lowered our foreign currency sovereign ratings on \nthe Republic of South Africa to 'BBB\/A-2' from 'BBB+\/A-2' and the local \ncurrency sovereign ratings to 'A-\/A-2' from 'A\/A-1'.\n -- We consider South African infrastructure provider Transnet SOC Ltd. \n(Transnet) to be a government-related entity (GRE) under our criteria and \nassess the likelihood of extraordinary support from the state, if needed, to \nbe \"extremely high.\"\n -- In accordance with our GRE criteria, we are lowering our foreign \ncurrency long-term rating to 'BBB' from 'BBB+', affirming our 'A-' local \ncurrency long-term rating at 'A-' and Transnet's long and short-term South \nAfrica national scale rating at 'ZaAA+' and 'ZaA-1' respectively. \n -- The negative outlook mirrors that on South Africa, and reflects the \npossibility that a further downgrade of the sovereign would likely result in a \nfurther downgrade of Transnet.\n\nRating Action\nOn Oct. 16, 2012, Standard Poor's Ratings Services lowered its foreign \ncurrency long-term corporate credit rating on South African infrastructure \nprovider Transnet SOC Ltd. to 'BBB' from 'BBB+'. At the same time, we affirmed \nthe 'A-' local currency long-term corporate credit rating, and the 'ZaAA+' \nlong-term and 'ZaA-1' short-term South Africa national scale ratings on the \ncompany. The outlook remains negative. \n\nRationale\nThe rating actions on Transnet follow our downgrade of the Republic of South \nAfrica on Oct. 12, 2012 (see \"South Africa FC Long-Term Rating Lowered To \n'BBB'; LC Ratings Lowered To 'A-\/A-2'; Outlook Remains Negative,\" on \nRatingsDirect on the Global Credit Portal). We consider Transnet to be a \ngovernment-related entity (GRE). In accordance with our criteria for rating \nGREs, we have lowered the foreign currency long-term rating on Transnet.\n\nThe ratings on Transnet continue to reflect the company's stand-alone credit \nprofile (SACP), which we assess at 'bbb+', as well as our opinion that there \nis an \"extremely high\" likelihood that the South African government would \nprovide timely and sufficient extraordinary support to Transnet, in the event \nof financial distress.\n\nIn accordance with our GRE criteria, our view of the ''extremely high'' \nlikelihood of government support is based on our assessment of Transnet's:\n\n -- \"Critical\" role for South Africa, owing to its position as the \nmonopoly infrastructure provider in freight rail, port ownership, and \npipelines, and its dominant position in port operations; and\n -- \"Very strong\" link with the government through South Africa's 100% \nownership, and its oversight of Transnet's strategy, funding plans, and \nregulation.\n\nThe SACP reflects Transnet's business risk profile, which we assess as \n\"strong\" under our criteria. We factor in the company's dominant business \npositions in the South African economy, continued operational and financial \nimprovements, and high and increasing profitability.\n\nThese strengths are partially offset by Transnet's financial risk profile, \nwhich we view as \"significant;\" the funding risk associated with its large \ncapital works program and scheduled debt maturities, exposure to changes in \nthe South African economy, an expected increase in debt over the next two to \nthree years, and regulatory uncertainty in its regulated divisions.\n\nLiquidity\nWe assess Transnet's liquidity as \"adequate\" under our criteria, factoring in \npotential extraordinary liquidity support from the government. Foreign \ncurrency debt is limited and fully hedged, but we anticipate that it will \nlikely increase over time to reflect the foreign currency requirements of the \ncompany's procurement program.\n\nOn June 30, 2012, Transnet reported cash and cash equivalents of about South \nAfrican rand (ZAR)2.3 billion (ZAR8.2 billion on Sept. 30, 2012), and ZAR7 \nbillion (ZAR7.9 billion on Sept. 30, 2012) of committed undrawn credit lines. \nWe anticipate that Transnet will generate about ZAR15 billion of funds from \noperations over the 12 months to June 30, 2013. In contrast, we forecast that, \nover the same period, capital expenditures will reach about ZAR14 billion to \nZAR18 billion while debt repayments will total about ZAR4.4 billion. Transnet \nhas indicated it intends to raise about ZAR14.1 billion this year, of which it \nhas already raised about ZAR14.7 billion at the time of writing.\n\nIn assessing the company's adequate liquidity, we factor in our view of \nTransnet's good relationships with banks, strong credit standing in financial \nmarkets, and prudent financial policy. We also consider that Transnet has a \ncredible plan to meet cash uses over the next few months. In early March, \nTransnet rolled over the bulk of its ZAR7 billion club loans for a further two \nyears to March 2014, and repaid about ZAR1.5 billion through cash balances. In \nJuly, Transnet successfully issued US$1 billion, 4% senior notes to finance a \nsignificant ramp-up in capital expenditure as part of its Market Demand \nStrategy.\n\nOutlook\nThe negative outlook on Transnet's foreign and local currency ratings reflects \nthat on the Republic of South Africa and the possibility that a further \ndowngrade of South Africa's ratings could lead to a downgrade of Transnet's \nratings under our GRE criteria. \n\nAll else being equal, a revision of the outlook on South Africa to stable \nwould likely lead to a similar action on Transnet.\n\nA positive or negative change in our view of Transnet's relationship with the \nsovereign, resulting in a change in our opinion of the likelihood of \nextraordinary government support available to the company, could result in an \nupward or downward rating action on Transnet. A weakening in our assessment of \nTransnet's SACP could lead to a downgrade of Transnet, assuming the sovereign \nrating and our view of the likelihood of government support remain unchanged.\n\nRelated Criteria And Research\n -- South Africa FC Long-Term Rating Lowered To 'BBB'; LC Ratings Lowered \nTo 'A-\/A-2'; Outlook Remains Negative, Oct. 12, 2012\n -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008\n -- Criteria Methodology: Business Risk\/Financial Risk Matrix Expanded, \nSept. 18, 2012\n -- Methodology And Assumptions: Liquidity Descriptors For Global \nCorporate Issuers, Sept. 28, 2011\n -- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008 \n -- Principles Of Credit Ratings, Feb. 16, 2011\n -- Rating Government-Related Entities: Methodology And Assumptions, Dec. \n9, 2010\n -- Stand-Alone Credit Profiles: One Component Of A Rating, Oct. 1, 2010\n -- Methodology: Short-Term\/Long-Term Ratings Linkage Criteria For \nCorporate And Sovereign Issuers, May 15, 2012\n -- Use Of CreditWatch And Outlooks, Sept. 14, 2009\n\nRatings List\nDowngraded\n To From\nTransnet SOC Ltd.\n Corporate Credit Rating\n Foreign Currency BBB\/Negative\/-- BBB+\/Negative\/--\n\n Senior Unsecured\n Foreign Currency BBB BBB+\n\nRatings Affirmed\n\nTransnet SOC Ltd.\n Corporate Credit Rating\n Local Currency A-\/Negative\/-- \n South African National Scale zaAA+\/--\/zaA-1 \n\n\nComplete ratings information is available to subscribers of RatingsDirect on \nthe Global Credit Portal at www.globalcreditportal.com. All ratings affected \nby this rating action can be found on Standard Poor's public Web site at \nwww.standardandpoors.com. Use the Ratings search box located in the left \ncolumn.<\/pre>\n