The Gauteng e-tolling saga appeared to be reaching some kind of head this week with the downgrading of the bonds used to finance the R20bn project and the appointment of a high level committee by Cabinet.
Deputy Finance Minister Nhlanhla Nene, together with other Treasury officials, is due to appear before Parliament's Standing Committee on Finance tomorrow to explain the implications of the project on the fiscus.
However, the bond market was showing little reaction to Friday's news with the SA National Roads Agency Ltd (Sanral) paper continuing trade steadily in a very narrow range in a tightly held market.
"These are very tightly held bonds and the Moody's downgrade has really prompted reaction saying that it would be bad for the country as a whole," said Tertia Jacobs at Investec Capital Markets.
Sanral has two sets of bonds trading in the market. The first set called the NRA (National Roads Agency) bonds are dated for 18 and 22 years maturity and are not guaranteed by government. These bonds were trading at a steady 106 basis points above the benchmark government R207 bond that has a yield of 7.43%.
The second set is guaranteed by government and are called the Highway bonds that have 20- and 34-year maturities and they were trading at 54 basis points above the R207.Negative outlook
Moody's Investor Services on Friday downgraded the Sanral bonds with an outlook that remained negative.
It said that the North Gauteng High Court decision to postpone the collection of the toll fees would have an impact on Sanral's cash flows and that the company would continue to have monthly losses of R100m.
In February Finance Minister Pravin Gordhan announced that government would inject R5.8bn into Sanral to help shore it up until the toll fees were collected, however, Moody's said the extra delay in collecting these fees would continue to impact negatively.
Jacobs said the bond market had been led to believe that e-tolling would definitely go ahead and had never factored in this kind of delay.
"It seemed that Sanral were initially irritated when government first announced that it would guarantee the Highway bonds as they believed that the tolling could shore up their balance sheet. But now they should be quite happy," she said.
Jacobs said that Friday's Cabinet announcement that government would set up a high-level committee to be headed by Deputy President Kgalema Motlanthe to look into the whole saga was seen as a positive move.
"It something that should have been set up long ago," she said.
Labour movement Cosatu, the ruling ANC's alliance partner, but vociferously opposed to e-tolling, was critical of the Moody's downgrade but was still formulating its official response to the formation of the cabinet committee.
"We have always been opposed to these credit agencies who formulate their opinions in a non transparent manner," said Cosatu national spokesperson Patrick Craven. "Our belief is that the public roads are for the public good and not there to make profits for private companies."
Craven said he was surprised to hear about comments by Minister in the Presidency Collins Chabane that Transport Minister Sibusiso Ndebele had not discussed the meetings held between the ANC and Cosatu about the e-tolling saga.
"I would have thought that a cabinet minister would have discussed these at Cabinet," he said.'A process'
Chabane said during Friday's post-Cabinet media briefing that Ndebele had not reported to Cabinet on these discussions as "... there was a process by which the ruling party brings matters to cabinet's attention. And he (Ndebele) had not brought this information across."
Chabane also said that no alternative to funding the GFIP had been discussed by Cabinet either and that the issue of a downgrade was of concern for all the state-owned enterprises that issued bonds or went to the capital markets to obtain funding.
He said government was not just concerned about the estimated R15.7bn worth of Sanral bonds owned by the Government Employees Pension Fund (GEPF), but the long term possible effects.
The GEPF had not yet responded to the Moody's downgrade.
Democratic Alliance finance spokesperson Tim Harris said from a fiscal policy perspective - if National Treasury had to provide a backstop of taxpayers' money for all of the Sanral debt, there would be a material effect on the fiscal framework and key debt-to-GDP numbers.
"This will also raise questions about whether all debt issued by state-owned enterprises should be regarded as contingent liabilities for the national fiscus," he said.
Harris said that if they did not, then almost R8bn worth of unguaranteed government pensions would be at risk, and questions would be asked of the creditworthiness of other state owned enterprises that have gone to the bond market.