New credit ratings agency

Global Credit Ratings Co. has been appointed SANRAL’s new credit ratings agency, effective from 1st October 2018. The roads agency terminated the services of Moody’s Investor Services when their contract expired on 30 June 2018.

Moody’s had earlier pointed out that there were liquidity pressures on SANRAL, this because of the government’s deliberations on the long-term solution for the GFIP funding model. They further explained that this was the reason SANRAL did not issue any new debt, so as to await the final announcement on this matter by the government; thus it had changed the roads agency outlook to “negative”.

However, Moody’s felt that from a “credit risk perspective, SANRAL’s credit profile, its strengths as well as its weaknesses are derived entirely from its relationship with the South African government because of the close operational and financial links between the two”; further noting the tight control that the government exercises over SANRAL’s operations.

In addition, the ratings agency stated that the roads agency “plays a critical role in South Africa’s road infrastructure development”, with “its main mandate being to expand and maintain the national road network on behalf of the national government”. Moody’s believes that “SANRAL will continue to enjoy a very high degree of government support”.

  • The GFIP funding model is under pressure mostly because of the poor e-toll collection rate.
  • Minister of Transport Blade Nzimande earlier said in a statement that “it is essential to strike a balance between the definite need for more and better roads and the undoubted constraint borne from a lack of funding”. The minister also stressed that people should start engaging in mature debate regarding how they want road infrastructure to be funded.
  • Treasury also noted that comments from civil society organisations, like OUTA, encouraging people not to pay e-tolls have hugely impacted on tax morality and act to further undermine the culture of payment.