Credit rating agency Moody’s has changed Transnet’s outlook from being on review for downgrade.

However, the agency’s outlook for the state-owned company is negative, in line with the country’s Sovereign rating, with Transnet’s global and long-term local currency investment grade credit rating remaining at Baa2.

Transnet says Moody’s noted and recognised its record of operating its railways infrastructure and freight services at a profit; its ownership of South Africa’s eight commercial ports and operation of a large part of the country’s stevedoring services; its oversight of the strategically important fuel pipelines; the significant medium-term capital expenditure programme, which is required to maintain and upgrade its infrastructure assets; and profitability despite credit metrics being under pressure due to the weak economic environment.

Transnet says it has adopted a strict cost management regime, focused on volumes – especially high-yielding lines – and continues with its capital investment programme.

Transnet plans to invest R340 – R380 billion over the next 10 years. Moody’s said it expects Transnet to commit to capital expenditure that will earn the company a sufficient return on assets to support its funding requirements.