Published on the Transnet Website under: SENS - 15052025 - Rating Action: Moody's Ratings places Transnet's ratings on review for downgrade on 15 May 2025.
Moody’s Ratings has placed most of Transnet SOC Ltd’s credit ratings under review for a potential downgrade due to increasing concerns over the company’s weak capital structure, deteriorating liquidity, and lack of confirmed additional government support.
Key points:
- Current Ratings at Risk: This includes the Ba3 Corporate Family Rating, b3 Baseline Credit Assessment, Ba3-PD Probability of Default Rating, and others. The short-term issuer rating (NP) was affirmed.
- Liquidity Pressures: Transnet's ZAR47 billion government guarantee facility (provided in December 2023) expired at the end of March 2025 and has been fully utilised. Only ZAR7 billion in undrawn loans and some cash remain, which Moody’s believes will cover just three months of obligations.
- Debt Burden and Maturities: Transnet faces regular debt repayments in 2025/26, including a large ZAR9.9 billion bond due in August 2025. Its interest coverage ratio remains low at 0.6x, and is expected to stay under 1.0x for the next few years.
- Operational Underperformance: Despite modest improvement under a recovery programme, performance lags behind targets. For example, rail volumes in March 2024 rose slightly to 152 million tonnes from 150 million tonnes year-on-year, well below the 170 million-tonne target.
- Government Support Critical: Moody’s still assumes strong state backing given Transnet’s strategic importance and 100% state ownership. However, no formal commitment to new support has been announced.
- Future Outlook: The review will assess whether government support will materialise and be sufficient to stabilise Transnet’s financial position. The review is expected to conclude in the coming weeks.
Moody’s highlights that equity support, asset sales, and operational improvements are necessary but face high execution risk. Without timely and adequate intervention, a downgrade is likely.
Read the full Moody’s review here:
