S&P Lowers Transnet’s Credit Rating to B+ as Financial Struggles Deepen Despite R51 Billion Government Guarantee
Transnet has suffered a major financial setback, with S&P Global Ratings downgrading its long-term issuer credit rating and senior unsecured debt from ‘BB-’ to ‘B+’.
The move underscores the state-owned logistics company’s fragile financial position, exacerbated by years of bailouts and growing reliance on government guarantees.
Over the past five years, Transnet has received at least R103.8 billion in state support. This includes a direct R5.8 billion bailout in 2022 to repair flood and locomotive damage, and a total of R98 billion in guarantee facilities—R47 billion in 2023 and R51 billion in 2025.
A ‘B+’ credit rating indicates increased vulnerability to adverse business, financial, or economic conditions, although the entity is still capable of meeting its financial obligations.
This is a downgrade from the previous ‘BB-’ rating, which signaled a slightly higher level of creditworthiness.
S&P attributed the downgrade to Transnet’s “sizeable negative free operating cash flow” and “unsustainable capital structure” in the absence of continued government support.
The latest R51 billion guarantee package, secured in 2025, includes R41 billion allocated for funding needs in 2026 and 2027, and R10 billion for short-term liquidity.
This aid has enabled Transnet to refinance critical debt maturities of R18.9 billion in 2026 and R11.4 billion in 2027.
“Transnet is entirely dependent on state support to service its debt,” S&P stated. “The substantial support provided by the government in the form of guarantees underpins Transnet’s access to funds to refinance its upcoming debt maturities, which, in our view, would otherwise have been extremely challenging.”
Despite projections for revenue growth—rising to R82 billion in 2025 and R87 billion in 2026, from R76.7 billion in 2024—the outlook remains bleak.
Transnet Freight Rail (TFR), the company’s largest division, continues to face operational challenges, including aging infrastructure, deferred maintenance, and persistent security issues.
S&P expects TFR’s rail volumes to reach 160.8 million metric tonnes in 2025, up from 151.7 million in 2024. However, this falls short of the company’s 170 million target.
“Structural business weaknesses remain and will take time to improve materially,” the agency warned.
While government guarantees and concessional funding from the National Treasury’s Budget Facility for Infrastructure offer temporary relief, they do little to change the agency’s view of Transnet’s weak cash flow and high leverage.
S&P has assigned the company a standalone credit profile of ‘ccc+’, reflecting its deteriorating financial fundamentals.
“The stable outlook reflects our view that Transnet will not face any material payment or liquidity events, thanks to the current R51 billion government guarantee framework,” S&P noted.
However, the agency cautioned that any reduction in government support or further deterioration in Transnet’s financial position could result in another downgrade.
