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​2011-10-13: Fitch rating boosts confidence in Johannesburg's finances


THE decision by ratings agency, Fitch, to confirm Johannesburg's current status reflects a confidence in the administrations capacity to manage the financial affairs of South Africa's largest city.

The City Manager, Trevor Fowler, says he welcomes Fitch's decision to keep the status unchanged and to affirm Johannesburg's long term senior unsecured rating on outstanding bonds.

In terms of the Fitch ratings Johannesburg has a Long-term local currency rating at 'BBB+';  a National Long-term rating ​at 'AA-(zaf)';  and National Short-term rating at 'F1+(zaf)'. The Outlooks are Stable.

According to Fitch the rating affirmation reflects the continued improvement in Johannesburg's liquidity and working capital in line with Fitch's expectations, as well as moderate borrowing, which has stabilised debt at around 45% of revenues and equal to less than 10 years of the current balance.

Mr Fowler says the City notes the concerns raised about tax and fee collection rates but is confident that the consolidation of the new systems in its revenue department is yielding a positive trend.

He notes that Fitch has indicated an operating margin improving towards 15% and a debt-to-current balance strengthening below five years could lead to a future upgrade in the ratings.

The Fitch report makes positive remarks on the City's progress in consolidating its capital budget. With investment declining to pre-2010 world cup levels of R 4 billion Johannesburg has posted its second consecutive year of overall balanced budget according to Fitch's calculations.

The Member of the Mayoral Committee, Clr Geoff Makhubo, in reviewing the Fitch report states: "The report confirms that Johannesburg's finances are in a healthy state despite the impact of the global recession, - This confidence is also reflected in the decisions of fund managers in the private sector who have in the past year participated in the municipal bonds issued by the City."

Issued by:
Gabu Tugwana
Director Communications
Cel: 082 495 5673