Moody’s Warns That Transnet is Running Low on Cash Reserves

May 16, 2025 stocks24

Moody’s Ratings indicates that Transnet, the state-owned transportation and logistics provider in South Africa, risks depleting its operational and debt-servicing funds within three months unless a government bailout is obtained.

The ratings agency has placed Transnet under review for a possible credit downgrade, expressing concerns about its “unsustainable” capital structure, deteriorating liquidity, slow operational progress, and insufficient government support.

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According to Moody’s, “the company requires further government assistance to refinance imminent debt and secure funding for its expanded capital expenditure initiatives.” The available cash and credit facilities of Transnet “will only adequately cover the company’s operational and investment requirements, along with upcoming debt maturities for the next three months,” it added.

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Facing challenges such as corruption, theft, and aging infrastructure, Transnet is seeking to increase private sector involvement in its railways and ports, whose underperformance has adversely affected the economy. The World Bank and S&P Global Market Intelligence have ranked the company’s container ports among the least efficient globally.

Moody’s points out that operational performance has improved at a slower pace than initially expected, with revenue growth driven by higher tariffs rather than increased volumes. The company’s debt levels are “excessively high,” leading to unmanageable debt servicing costs, while progress in asset sales and collaborations with the private sector has been sluggish.

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Moody’s stated, “The government continues to support Transnet and intends to provide additional guarantees or assistance to avert default on forthcoming debt maturities.” However, the lack of a formal announcement thus far introduces uncertainty and heightens the risk of default.

Transnet has not yet responded to Bloomberg’s email request for comment.

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