Ratings agency Moody’s Investor Services has downgraded the credit ratings of the South African National Roads Agency (Sanral).
The agency downgraded Sanral’s long-term local and foreign currency global scale ratings to Ba2, from Ba1, with the outlook accorded as negative and the short-term global scale affirmed as not prime.
Further, Moody’s downgraded the long-term national scale rating to A1.za from Aa3.za and affirmed the short-term national scale rating of P-1.za; with the outlook accorded as negative.
The rating reflects Sanral’s ongoing liquidity pressure, which is amplified by the national government’s decision to further delay its announcement on the long-term solution to the Gauteng Freeway Improvement Project (GFIP) funding model.
Sanral said in a statement on Monday that its ratings could be stabilised if the government could resolve the GFIP long-term funding model in a way that would allow the roads agency to honour its financial commitments.
Although Moody’s acknowledged the government decision in March to approve an un-earmarked additional transfer of R1.9-billion to Sanral to fund the GFIP project, the raods agency still needs a further R3.9-billion until March 2019.
Further, Sanral said that the lack of timely government support had increased the GFIP’s operational risks and had created uncertainty on the future of the open road tolling model. The group also warned that its ratings could be further downgraded.