SANRAL bond auction raises R275 million

Pretoria, 2 July 2014: Earlier today, investor confidence was evidently impacted by the pronouncements of the Gauteng Premier, David Makhura, ahead of the South African National Road Agency SOC Ltd's (SANRAL) July Bond Auction.

The entity wanted to raise R500 million, but only received total bids of R465 million (wider than current prices) and issued R275 million at mark to market prices.

The lack of interest was unfortunate given the positive announcement last week, by Moody's Investor Services, to change SANRAL's ratings outlook from negative to stable.

The bonds were allocated as follows:

HWAY20.: R15 million @ 55bp

HWAY23.: R100 million @ 29bp

HWAY24.: R100 million @ 30bp

HWAY35.: R60 million @ 67bp

The result of this auction has once again demonstrated the close relationship between government and SANRAL, a government implementing agency. Investors are sensitive to policy uncertainty and this was clearly communicated today, which overshadowed the positive announcement by the ratings agency, Moody's." said Inge Mulder, SANRAL Chief Financial Officer.

"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.

Moody's made the announcement last week and noted that: "The decision to affirm SANRAL's ratings and change the outlook to stable from negative primarily reflects the evidence of good electronic toll (e‐toll) collections related to the Gauteng Freeway Improvement Project (GFIP), the company's biggest toll road project."

The next SANRAL bond auction is scheduled for August 2014.

Statement issued by SANRAL, July 3 2014

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