Its April bond auction was canned because of lack of investor interest while in May it took a wait-and-see approach ahead of a possible sovereign downgrade decision by ratings agency Moody's. The June bond auction scheduled for last week was moved to Wednesday after S&P Global Ratings' decision on Friday.
Sanral's February and March bond auctions attracted sufficient investor interest and raised R400m each. On its return to the bond market on Wednesday, Sanral raised R600m due to favourable market prices.
Sanral chief financial officer Inge Mulder said the agency's prudent approach "proved to be right" as the bond auction was oversubscribed by two times what it sought. Mulder said the success of the auction showed the confidence investors had in Sanral's business and as a going concern. "Investors are known for being prudent and focused on the long-term, and this is why our bonds are a good investment," she said. Mulder also said policy certainty around the user-pay principle and the agency's commitment to collecting e-toll revenue was "bearing fruit".
"We will continue to make every effort to collect to prove to our investors and ratings agencies that we will do what is necessary to realise the potential e-toll income stream," she said.
In 2015 Sanral had to cancel auctions over five months after a failed debt sale in April was attended by only one bidder. The agency said it had cancelled the auctions to avoid raising its debt load until it received state assurance e-tolling would continue.
Nedbank's head of debt capital markets, Bruce Stewart, said 2016 had seen significantly higher-than-usual levels of volatility in SA markets, stemming from a combination of uncertainty in both the domestic market and foreign markets. "Credit ratings have also reflected this uncertainty with concomitant impact on pricing in the debt markets," Stewart said.
He said investors were "super" sensitive about the pricing on bonds issued and issuers had to be sensitive to the timing when accessing the markets "to avail themselves of the optimum available liquidity".
"It goes without saying that the conditions in the market have not been great this year. One has to strategically assess timing when accessing the debt markets. However, one reaches a point where one realises that it is going to be a while before conditions settle and life must go on. Liquidity for good credit is there, you just have to know where to look," Stewart said.
Source: Business Day
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