SANRAL bond auction affected by uncertainty over e-tolls

Pretoria, 5 November 2014. Investor confidence in SANRAL has been negatively impacted by the uncertainty created by the Gauteng government's decision to set up an e-toll review panel.

In the final auction for the 2014 calendar year, SANRAL wanted to raise at least R500 million, as the next auction is only scheduled for February 2015. Even though total bids of R765 million were received, the prices were much wider than the guidance and therefore only R415 million was allocated.

The lack of interest among investors was unfortunate given the presentations made to the panel by the Minister of Transport, Dipuo Peters and senior government officials over the past two days. The Minister expressed strong support for SANRAL indicating that the e-toll system in Gauteng will continue in terms of decisions taken by the Cabinet.

The bonds were allocated as follows:

HWAY20. : R100 million @ 72bp

HWAY23. : R150 million @ 31bp

HWAY24. : R100 million @ 31bp

HWAY34. : R65 million @ 85bp

The result of this auction once again demonstrated the close relationship between government decisions and SANRAL, as a government implementing agency. Investors are sensitive to policy uncertainty and they clearly communicated this today," said Inge Mulder, SANRAL's Chief Financial Officer.

"We trust that the strong endorsement of SANRAL in the Minister of Transport's presentation to the review panel on Tuesday and her assurance of government support to the agency will reduce the levels of uncertainties in the future and draw investors back to future bond auctions," she said.

The next SANRAL bond auction is scheduled for February 2015.

"We will continue to do our utmost best in ensuring that we produce and maintain roads which are safe, time and cost effective to use," Mulder concluded.

Statement issued on behalf of SANRAL by Yolisa Pasipanodya, Meropa Communications, November 5 2014

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