Nedbank has extended R1.1bn (about US$110mn) for the export of diesel locomotives from the US to South Africa.

Transnet, the state-owned transport and logistics provider, is the borrower and the finance has been guaranteed by the American export credit agency (ECA), US Exim.

GTR understands that Absa Capital, part of the Barclays group acted as advisor and co-ordinating mandated lead arranger. The finance has a tenor of 10 years, with pricing remaining confidential.

The agreement will see Transnet import 53 locomotives from General Electric in the US. This is the third such export agreement to be struck by Transnet in the past 12 months. In August 2012, the company purchased 43 locomotives at a cost of R864mn.

That finance was arranged by Barclays, with funding again coming from Nedbank. A second batch of 47 was delivered subsequently.

Speaking to South African press, Transnet’s chief executive Brian Molefe said: “This is further evidence of the successful implementation of our funding strategy, as the transaction lowers our cost of debt and diversifies our funding sources.”

US Exim has some history of financing transactions in South Africa. In August 2012, the ECA signed a US$2bn deal with the Industrial Development Corporation of South Africa to support the export of US equipment to renewable energy projects in South Africa.

Indeed, bilateral trade between the pair has been growing rapidly. In 2011, the trade rose by 18% to US$16.8bn.