Telkom paper pulls in R1bn

Telkom raised R1bn last week via its domestic medium-term note programme, which it used to refinance maturing debts.

Telkom raised R1bn last week via its domestic medium-term note programme, which it used to refinance maturing debts.

“Investor demand continues to reflect strong interest in Telkom paper as we continue to diversify our sources of funding,” a spokesman for the company told Business Day.

The partially state-owned telecommunications group raised R346m through a sixmonth bond maturing September 2018, at a coupon of 7.84%.

It also issued a 12-month bond worth R654m due March 2019, with the coupon rate set at 95 basis points above the threemonth Johannesburg interbank average rate.

Telkom fully redeemed two bonds worth a combined R797m last week.

At the end of September 2017, Telkom’s net debt to earnings before interest, taxes, depreciation and amortisation (ebitda) ratio was 0.7.

The group, which has mostly local debt, said it planned to keep net debt to ebitda below 1.0 in the full financial year ending March 2018.

“Despite the increase in net debt, including financial assets and liabilities, to R7.6bn from R3.4bn as at September 30 2017, our group’s capital structure remains strong,” Telkom said late in 2017.

The company said it planned to “move to a more efficient capital structure”.

Bloomberg reported last week that bond sales by South African companies were off to the slowest start to a year since 2014, following record issuance in 2017.

By March 20, corporate bond deals so far in 2018 were worth just R21.5bn.

That compared to R27.6bn a year before.

Companies that had held back on investment amid the political uncertainty of the past few years wanted further evidence of policy continuity and economic recovery, Mike van der Westhuizen, a portfolio manager at Citadel Holdings, told Bloomberg.