Investor confidence in Transnet SOC Ltd continues to be positive with R3.3 billion raised through bonds issued on the capital markets at the beginning of June.

The state-owned transport and logistics firm had planned on issuing a R1 billion bond but due to the overwhelming demand from the market, the bond was oversubscribed by over 3.4 times. The issue is part of Transnet’s Domestic Medium Term Note Programme, which is part of the company’s R15 billion funding programme for the year.

Last year, Transnet raised R14.6 billion in the capital markets, including a US bond issuance of R8 billion, through its Global Medium Term Note Programme.  So far this year, Transnet has raised about half of the funding requirement for the year to end March 2014.  In addition to the global and domestic bonds, Transnet also raises funds through development finance institutions, export credit agencies and issuing of commercial paper, among others.

The issue of the three-year floating rate note and the cost of the funding are in line with Transnet’s strategy of diversifying instruments and sources of funding. Transnet raises funds in the local markets on a weekly basis, mainly to cover the costs of its audacious R300 billion infrastructure investment programme – the Market Demand Strategy (MDS).

Brian Molefe, Group Chief Executive,  says, “This achievement is a powerful testament to our enduring appeal as a solid investment choice. Encouragingly, it reflects the strides we have taken in building and strengthening the company’s financial viability.

Transnet raises funds in the debt capital markets on the strength of its financial position – without explicit guarantees from its shareholder, the South Africa government.