You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App
Join our mailing list to receive top business news every weekday morning.

Bond investors cheer near-completion of Sasol’s US project

Sasol bonds have beaten returns on shares, which have added less than 1%.
Sasol recently said its $11.4bn Lake Charles plant in Louisiana was 96% complete, allaying concerns about continuing cost overruns. Picture: Waldo Swiegers, Bloomberg

For investors with nerves strong enough to stomach swings in oil prices and delay upon delay in a multi-billion dollar project, Sasol’s bonds have given ample reward.

The Johannesburg-based petro-chemical company’s $750 million of notes due 2028 have returned 11.7% in the year to date, more than the 6.7% gain in the ICE Bank of America Merrill Lynch Emerging Markets Corporate Plus Energy Index and the 6% average across emerging-market corporate debt. The bonds have also beaten returns on the shares, which have added less than 1%.

Revenue from Sasol’s main coal-to-liquid-fuel business depend on the price of crude oil, which has climbed 32% this year. The company recently said its $11.4 billion Lake Charles plant in Louisiana was 96% complete, allaying concerns about continuing cost overruns. The rand’s stability has also helped contain capital and debt-service costs.

“Ultimately, that has enabled Sasol to be in a better position to service debt,” said Bronwyn Blood, a fixed-interest portfolio manager at Granate Asset Management.

Yields on the 2028 bonds have dropped 132 basis points this year, narrowing the premium over comparable US Treasuries to 227 points, from a high of 386 points in January.

© 2019 Bloomberg L.P

COMMENTS   0

You must be signed in to comment.

SIGN IN SIGN UP

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: