Transnet has confirmed that it is in discussions with several financial institutions, including the Brics New Development Bank (NDB), regarding funding for its capital projects.
This comes after media reports indicating that the NDB was considering granting a loan of R18 billion to Transnet for upgrading its locomotives so that its embattled rail corridors can run at full capacity. The bank aims to complete the transaction by the end of the year to expand its $5.6bn (R105.5bn) portfolio in South Africa, according to a report in Business Day.
“The loan itself will be for R18bn for Transnet for the modernisation of its locomotives. We are considering another big loan for water and sanitation infrastructure,” the bank’s COO, Vladimir Kazbekov, said.
It is expected that the South African government will most likely guarantee the debt in line with the bank’s requirements.
Asked about the R18bn and when it would be finalised, Transnet declined to respond in detail to questions posed by Freight News.
“Transnet is in discussions with a number of funding institutions, including the NDB, around possible funding for its capital projects. Any further communication will be done once these discussions have been finalised, and all governance processes concluded,” Transnet said.
Headquartered in Shanghai, the bank is focused on providing emerging-market economies with the services of a multilateral financial institution.
Brazil, Russia, India, China and South Africa founded the bank in 2015 when the country contributed $2bn (R37.68bn) to the bank’s equity capital to own a 20% stake. The NDB expanded its country membership base in 2021 to include Bangladesh, Egypt, United Arab Emirates and Uruguay.
The NDB raised R1.5bn ($94 million) at its first-ever South African bond auction this month. It received more than R2.5bn in bids for the three- and five-year bonds, enabling it to increase the deal size. The bank said in a statement that it had allocated 71% to institutional investors and the rest to local banks.
“NDB is seeking to increase its presence in the local capital markets of its member countries to fund its robust portfolio of local currency loans,” said NDB CFO and vice-president, Leslie Maasdorp.
“The proceeds will be used to fund infrastructure and sustainable development projects in South Africa.”