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TRA - Transnet SOC Limited - Moody`s changes outlook on Transnet`s A3/P-2 rating to negative from stable (South Africa) TRA - Transnet SOC Limited JSE Code: TRA Moody`s changes outlook on Transnet`s A3/P-2 rating to negative from stable (South Africa) This is one of two rating actions on South Africa`s corporate government- related issuers (GRIs) which are being announced separately. RATINGS RATIONALE Moody`s decision to change the outlook on Transnet`s ratings to negative was driven primarily by the change in outlook on South Africa`s government bond ratings, but also by the overall execution risk of its significant capex programme over the next five years, as well as the potential pressure to accelerate its current capital expenditure programme. In the past years, though, Transnet has successfully implemented over 90% of its budgeted capital investment program. Transnet`s A3/Aa3.za/Prime-2 ratings remain unchanged. The company`s A3 rating reflects the combination of the following inputs: (a) a Baseline Credit Assessment (BCA) of 7 (equivalent to an A3 rating on the long-term scale), (b) the A3 local currency government rating for South Africa, (c) very high dependence, and (d) high support. The lack of uplift to Transnet`s BCA reflects the assumed high default correlation between Transnet and South Africa`s sovereign rating, so that uplift above the rating of South Africa is not considered appropriate. At the same time, the very high dependence of Transnet on the South African government largely explains why the negative outlook on the South African sovereign rating has an impact on Transnet`s outlook as well. While the government support does not currently provide any uplift to Transnet`s ratings, Moody`s nevertheless expects it to mitigate to some extent any potential decline in Transnet`s creditworthiness. In Moody`s view, the key credit factors that are likely to impact Transnet`s standalone credit profile (or its BCA) over the next few years are (1) the potential increase in debt that will be needed to meet the large capex plans in the event that they are substantially increased as part of possible government stimulus measures; and (2) the tariffs that Transnet will be able to charge to recover the cost of such increased capital spending. For full details please refer to http://www.moody`s.com /research/Moody`s -changes-outlook-on-South-Africa-A3-government-ratings-to PR-230435. Transnet SOC Ltd Carlton Centre P.O. Box 72501 Registration 150 Commissioner Parkview, Johannesburg Number Street South Africa, 2122 1990/000900/06 Johannesburg T +27 11 308 2313 2001 F +27 11 308 2315
Directors: ME Mkwanazi (Chairman) B Molefe* (Group www.transnet.n Chief Executive) NK Choubey# MA Fanucchi Y Forbes HD et Gazendam NBP Gcaba MP Malungani BD Mkhwanazi T Mnyaka N Moola MP Moyo NR Ntshingila IM Sharma IB Skosana E Tshabalala DLJ Tshepe A Singh* (Acting Chief Financial Officer) *Executive #Indian Group Company Secretary: ANC Ceba 14 November 2011 Sponsor : Transnet SOC Limited Date: 14/11/2011 11:52:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
