Transnet’s credit rating has increased by two notches to ‘BBB’ from the previous ‘BB+’ by Fitch Ratings which according to Transnet confirms the success of its efforts in strengthening the company’s business and financial position.

According to Transnet the upgrade confirms it has a robust execution plan and appropriate mitigating strategies for its investment programme – the Market Demand Strategy. It also affirms Transnet’s ability to raise funds in the market on the strength of its balance sheet without government guarantees, allowing the fiscus to channel its resources towards the country’s other pressing needs.

Announcing the upgrade, Fitch Ratings said it had “…. upgraded South Africa-based Transnet SOC Ltd’s (Transnet) Long-term foreign currency Issuer Default Rating (IDR) to ‘BBB’ from ‘BB+’ and its Long-term local currency IDR to ‘BBB’ from ‘BBB-‘.” The outlook is stable, it added in a statement.  In addition, Fitch Ratings also issued Transnet with a first time stand-alone credit rating of BBB- which is one notch above the previous combined BB+ credit rating.

The agency stated that Transnet’s credit profile benefits from its position in the country’s rail, port and pipeline services, with a long-term contract base and business diversification underpinning its strong operating cash flows.

Fitch said in a statement : “The stable outlook incorporates our expectations that Transnet’s operations will remain strong, despite possible weakening in improving export markets, and that management would scale back its capex in case of weaker demand expectations to maintain the company’s financial profile in line with stated targets.”