The ratings agency Moody’s has changed SANRAL’s outlook from negative to stable.

This follows on the government’s decision to grant additional funding to SANRAL to make up for the continuing under-collection of e-tolls. This had caused cash-flow problems but now the roads agency will be able to fund its operating requirements as far as its e-toll operation is concerned.

But, says Moody’s: “The rating is constrained by very high debt levels, high capital expenditure requirements as well as ongoing liquidity pressure related to low cash collections on the Gauteng Freeway Improvements Projects (GFIP).”

The ratings agency added that an upgrade is dependent on the government introducing an alternative funding model which will include collection and enforcement strategies for GIFP – if this results in an improvement of SANRAL’s cash flows.

What government’s approach on this matter is, was to have been announced at the end of August but it has since been delayed and was not known at the time of publishing of this edition.

Moody’s made it clear that it kept the roads agencies debt rating unchanged but its outlook had improved. This could be downgraded if there was a change in the level of government support – which it did not expect.

Another R2.2bn a year was set aside for SANRAL in the 2019-2022 toll budget to compensate for the low-level of e-toll payment compliance. Moody’s avers that “the decision to stabilise SANRAL’s outlook reflects the SA government’s decision to earmark additional funding” and this “re-affirms the strategic importance of SANRAL” and its close link to the government on the operational and financial level.