The South African rail, ports and pipelines operator, Transnet, has received the thumbs up from international investors as the loan secured from the United States export credit agency, US-Exim, affirms Transnet’s creditworthiness and South Africa’s attractiveness as an investment destination.
Transnet announced in March this year its agreement to purchase 599 electric and 465 diesel locomotives from four equipment manufacturers including General Electric (GE).
“The guarantee is mainly intended for GE’s share of the locomotives which is 233 locomotives as well as other acquisitions from the manufacturer,” said Transnet in a statement.
The purchases form part of Transnet’s locomotive fleet renewal programme, a key element in the company’s 312 billion rand investment programme for the next seven years.
(READ MORE: Transnet invests in R50bn train project)
Transnet said that the guarantee from US-Exim will not only allow it to raise funds in the markets for the GE locomotive transaction but to also negotiate favourable repayment terms including the tenor and interest rates.
“The required funding will be raised through bank loans supported by the US-Exim guarantee. The terms of funding to be backed by the guarantee will be dependent on a number of factors, including market conditions, pricing and investor appetite,” the statement continued.
“The facility will be drawn over a three-year period in line with the delivery schedule for the locomotives. The repayment period is 14 years. The term will extend Transnet’s debt maturity profile while improving the match between assets and liabilities.”
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