Moody's rating the City of Joburg

23 March 2016

The City of Johannesburg has consistently demonstrated its financial resilience as evidenced by the generation of recurring surpluses, maintenance of substantial cash balances which have hovered around R5 billion and the continued roll out of the R100 billion 10 year capital expenditure program.

All of this has been achieved within the context of a deteriorating global economic environment in which emerging markets are the worst exposed.

On Thursday, 17 March 2016, Moody's Investors Service placed the rating of the City of Johannesburg of A2.za under review for possible downgrade prompted by the potential deterioration of South Africa’s credit profile as captured by Moody’s recent decision to put South Africa’s Baa2 government bond rating under review for downgrade.

The City of Johannesburg is a self-sustaining metro which generates 79% of its revenue from its own sources and has achieved the following in the past years:

A strong financial position with a surplus of R3,9 billion in 2014/2015 from R3,8 billion in 2013/2014;
Healthy liquidity levels with a closing cash balance of R4,9 billion in 2014/2015 and successful redemption of bonds and other non-listed liabilities.
Spent 94% of capital expenditure budget which has increased from R7,3 billion in 2013/2014 to R10,2 billion in 2014/2015;
A progressive increase in the City’s total assets by 17% from R67 billion in 2013/2014 to R78 billion in 2014/2015;
Increase in total Revenue by 8% from R38 billion in 2013/2014 to R42 billion in 2014/2015;
Revenue collection rate of 92% was achieved for the year under review (2014/2015);
Clean Governance – through-out the political term, the quality of governance in the City has improved as signified by improved audit opinions for the City and its entities

“During this term of office, the City of Johannesburg has taken a prudent financial management approach by implementing the Financial Development Plan (FDP) that proactively assists in withering economic downturns”, says Cllr Geoffrey Makhubo, the Member of the Mayoral Committee (MMC) for Finance in the City of Johannesburg.

“As an agile entity, the City continues to experience strong revenue growth and its financial management systems remain sophisticated. The City’s economic base remains large and well diverse which is a key attribute for thwarting economic volatilities. Despite the increased capital expenditure, the City is still able to maintain stable debt ratios as well as grow and improve its surpluses all of which serve to lower risk to investors and stakeholders”, emphasises MMC Makhubo.

A strong financial position with a surplus of R3,9 billion in 2014/2015 from R3,8 billion in 2013/2014;

Healthy liquidity levels with a closing cash balance of R4,9 billion in 2014/2015 and successful redemption of bonds and other non-listed liabilities.

Spent 94% of capital expenditure budget which has increased from R7,3 billion in 2013/2014 to R10,2 billion in 2014/2015;

A progressive increase in the City’s total assets by 17% from R67 billion in 2013/2014 to R78 billion in 2014/2015;

Increase in total Revenue by 8% from R38 billion in 2013/2014 to R42 billion in 2014/2015;

Revenue collection rate of 92% was achieved for the year under review (2014/2015);