The major rating constraint impacting SANRAL is the high level of debt on its balance sheet, with insufficient operating cash flows due to its inability to collect the tolls associated with the Gauteng Freeway Improvement Projects (“GFIP”). Although gross debt decreased slightly to around R46bn at FY21 (FY20: R47.8bn), debt coverage metrics remain very weak. Toll income has been sufficient to cover interest costs, but the ratio remains low at 1.3x in FY20 (FY19: 1.1x), whilst including other operating expenses coverage is only around 70%.
Despite the challenges, SANRAL’s proactive management of debt is noted in support of its liquidity. SANRAL refinanced around R3.9bn in debt maturities during FY21, and does not have further maturities during FY22, aside from the promissory notes that are rolled on an annual basis. As part of the refinancing, around R2bn in new notes were issued with maturities in excess of 10 years, indicating some renewed appetite for longer-term SANRAL bonds. However, SANRAL now faces much larger debt maturities of around R7bn and R10bn in FY23 and FY24 respectively.