Moody’s has taken rating action on 23rd June 2023, to affirm the Ba3 long term ratings of City of Johannesburg and maintained stable outlook.
Moody’s has taken the following rating actions:
• Affirmed the Baseline Credit Assessment (BCA) of Ba3, the Long-Term Global Scale Rating (LT GST) and National Scale Rating (NSR) issuer ratings of Ba3/A1.za for the City of Johannesburg and maintained the Stable outlook.
• Moody’s also affirmed the Short-Term National Scale (ST NSR) Rating of P-1. za and affirmed the Short-Term Global Scale Rating (ST GSR) of NP.
The affirmation of the ratings of City of Johannesburg with stable outlook reflects the issuer’s improved operating performance and demonstrated resilience in its liquidity position, which Moody’s expects to remain sound.
Moody’s cited that the affirmation of City of Johannesburg’s Ba3 reflects the city’s solid operating performance with gross operating balances at 7.2% of operating revenue at fiscal year-end 2022 (FY2022). While significant structural challenges continue to weigh on the ratings such as load shedding and water shortages, the moderate level of debt (33.5% of operating revenue in FY2022) together with adequate liquidity reserves place the city in a favorable position to withstand operating pressure in the medium term.
The City of Johannesburg has consistently demonstrated its financial resilience as evidenced by the generation of recurring surpluses, maintenance of adequate cash balances, maintenance of stable debt ratios and the continued roll out of the capital expenditure program. All of this has been achieved within the context of a deteriorating global economic environment.
• The City of Johannesburg achieved the following in 2021/22
• A strong financial position with a surplus of R1.167 billion,
• A positive cash balance of R3.8 billion
• We spent R6.5 billion (88%) of the approved capital budget of R7.4 billion (adjusted).
• We experienced a progressive increase in the City’s Property Plant and Equipment to R81 billion
• In the year under review, the City achieved a revenue collection rate of 88.4%against a target of 90.5%..
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