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Overview

Bank of China contributes to $657 million syndicated ‘B’ loan to support Transnet’s 7-year rolling capital expenditure program (CEP)

Commitments (Constant USD, 2023)$143,320,815
Commitment Year•2016Country of Activity•South AfricaDirect Recipient Country of Incorporation•South AfricaSector•Banking And Financial ServicesFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Feb 10, 2016

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 Commercial Banks

  • Bank of China (BOC)

Cofinancing agencies

Intergovernmental Organizations

  • African Development Bank (AfDB) (ADB) (BAD)

Private Sector

  • HSBC London
  • Mizuho Bank, Ltd.
  • SMBC Bank International PLC (formerly Sumitomo Mitsui Banking Corporation Europe Limited (SMBCE))
  • The Bank of Tokyo-Mitsubishi, Ltd. (BTM)

Receiving agencies

State-owned companies

  • Transnet SOC Ltd

Implementing agencies

State-owned companies

  • Transnet SOC Ltd

Loan description

In 2016, Bank of China contributed to USD 657 million syndicated ‘B’ loan to support Transnet’s 7-year rolling capital expenditure program (CEP), South Africa

Interest type•Unknown

Narrative

Full Description

Project narrative

On February 10, 2016, Transnet State-Owned Company Limited (‘Transnet’) — an integrated transport and logistics company that is 100% owned by the Government of South Africa (GoSA) — signed a senior unsecured A-loan agreement (worth $250 million) with the African Development Bank (AfDB) and a senior unsecured B-loan agreement (worth $657 million) with a syndicate of five banks (Bank of China, Bank of Tokyo Mitsubishi, SMBC, Mizuho, HSBC London) to finance its 7-year rolling capital expenditure program (CEP). The borrowing terms of the A-loan and B-loan are unknown. The borrower was expected to use the proceeds of the loan to finance the acquisition of rolling stock to increase freight capacity from 80 metric tons to 176 metric tons, thereby migrating freight from road to rail. The project was ultimately expected to modernize Transnet’s rolling stock fleet, improve operational efficiency, and position the company as a strategic regional player. According to the AfDB, this project reached completion.

Staff comments

1. The precise monetary value of Bank of China’s contribution to ‘B’ loan is unknown. For the time being, AidData assumes equal contributions ($131,400,000) across the five known members of the syndicate. 2. Transnet is 100% owned by the Government of South Africa (GoSA), but is legally and financially autonomous. It's responsible for ensuring that the country’s transport and logistics system operates according to international standards. 3. Transnet’s capital expenditure program (CEP) was focused on catalyzing economic growth and job creation in South Africa and the wider region. The program was expected to improve productivity and consumption activity by connecting businesses to local and international trade. In rural areas, the program was expected to result in cost effective and reliable transport for agricultural products, thereby supporting food security and rural employment. It involved investment of approximately ZAR 312.2 billion (US$ 27.5 billion) over seven years from 2013 to 2020 to repair, upgrade and expand infrastructure in order to improve South Africa’s efficiency and competitiveness in the transport sector. Approximately 51% of the total investment was intended for repair or replacement of existing infrastructure, while the balance will be used to build additional capacity.