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Overview

Transnet signs contract for USD 15 million cross-currency interest rate swap with China Development Bank (second one)

Commitments (Constant USD, 2023)$15,094,444
Commitment Year•2018Country of Activity•South AfricaDirect Recipient Country of Incorporation•South AfricaSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Implementation

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2018
End (planned)
Jun 12, 2030
Last repayment
Dec 29, 2029

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Policy Banks

  • China Development Bank (CDB)

Receiving agencies

State-owned companies

  • Transnet SOC Ltd

Loan desecription

Transnet signs contract for USD 15 million cross-currency interest rate swap with China Development Bank (second one)

Grant element•1.3918%Interest rate (t₀)•9.42346%Interest type•Variable Interest RateLoan tenor•3-month rateMaturity•12 years

Narrative

Full Description

Project narrative

According to the annual Financial Statement of Transnet in 2018, as of March 31, 2018, South African state-owned transportation company Transnet was party to a cross-currency interest rate swap for USD 15 million with the China Development Bank (CDB). In this transaction, both parties simultaneously loaned to each other but at different interest rates. The hedge interest rate payable by Transnet was 3-month JIBAR + 3.94%, and the hedge interest rate receivable by Transnet was 3-month LIBOR + 2.57%. According to the Johannesburg Stock Exchange, the average 3-month monthly JIBAR rate over 2018 was 4.82%, so at the time of signing the hedge interest rate payable was 8.76%. In this time period, the average 3-month LIBOR rate over 2018 was 2.307%, so at the time of signing the hedge interest rate receivable was 4.877%. The cash flows are projected to occur quarterly until June 12, 2030. The JPMorgan Chase Bank branch in Johannesburg will act as the hedge counterparty to hedge against interest liabilities.

Staff comments

The time that the swap took place is unknown, so coder used the average 3M JIBAR rate for 2018 to calculate hedge interest rate payable, and the average 3M LIBOR rate for 2018 to calculate hedge interest rate receivable. This project is not to be confused with Record ID#59318. Although the transaction amount is the same, the interest rate is different.