Favourable domestic credit ratings assigned this week to Sasol, whose substantial borrowings are expected to peak this year, are unlikely to alter its treasury management strategy.
The maiden ratings by Moody's Investors Service could lead to a slight reduction in funding costs in South Africa, analysts said. But because much of the group's debt was offshore, the ratings would have a limited effect.
The rating held most significance for Sasol's bond programme, worth R6 billion in financial 2004, on which interest paid was informed by credit ratings.
Moody's assigned Sasol its highest possible short-term credit rating and fourth-highest long-term rating. Group communications manager Marina Bidoli said the rating would not alter Sasol's funding mix, although its funding strategy was reviewed continuously.
In its most recent annual report Sasol said short-term cash shortfalls were financed primarily from banking facilities and its commercial paper programme.
Long-term spending was funded by a combination of floating- and fixed-rate borrowings, usually in the currency of the project or acquisition, and with repayment terms that matched expected cash flow generated by those assets.
In June last year, Sasol's net debt came in at R14.4 billion, which translated into a gearing ratio of 41 percent, falling within the group's comfort band of 30 percent to 50 percent.
Debt exposure was predominantly in rands (70 percent) followed by dollars (20 percent) and euros (10 percent). By the end of December, gearing had crept up to 42 percent.
The annual report said gearing should peak at or near the upper limit of the target range this year, due to substantial capital investment in its clean fuels upgrade, the $1 billion gas-to-liquids plant in Qatar and a polymers plant in Iran. Positive cash flows from these were expected from 2006.
Bidoli said Sasol had sought the rating because it was an active participant in local capital markets. Its global rating by Standard & Poor's did not necessarily reflect its credit standing in South Africa.
Sasol shares closed 15c up at R157.75 yesterday. The FTSE/JSE Africa Top40 index dipped 0.13 percent.