​02-10-2012: Moody's takes action on municipalities following sovereign action

Today, the City’s credit rating was downgraded by Moody’s Investor Services in line with the credit rating action taken on South Africa, as a sovereign.
 
The City’s liquidity performance post-2010 has been improving from the low levels experienced back in 2009 to surpluses in excess of R2bn in 2012. Gearing

levels and are continuing to down from 54% in 2009 to 43% in 2012 (based on interim results), and continue to come down.
 
The City has, however, developed a Financial Plan to expertly manage the roll out of the R100bn capital expenditure programme as announced by the Executive

Mayor early this year, which takes into account the national government’s support.
 
The City’s Growth and Development Strategy (GDS) is being implemented.  One of the pillars of the GDS 2040 is “Financial Sustainability” which the

administration has prioritized as evidenced by the streamlining of certain roles and responsibility to save costs. Prudential financial management remains

central to the City’s operations, and management is committed to hold and keep the City as a credible issuer in the Debt Capital Markets.
 
Johannesburg City remains the central place for business in South Africa;  the pulse of the Gauteng economy, contributing 17% to the country’s Gross

Domestic Product (GDP) and 48% to Gauteng’s economy.
 
While the economic climate is expected to slowdown, the City is making progress in an array of aspects to minimise the expected impact, and continually

position Joburg as one of the top forty (40) metropolitans in the world.
 
The institutional review process undertaken by the administration is progressing well. This approach has the benefit of significantly improving our capacity

to handle challenges and device strategies that continue to propel the City to greater heights. In another front, the Revenue Step Change has yielded

positive results as evidenced by the improved liquidity position, and also, the improvements in a number of efficiencies that are experienced internally.
 
The City continues to achieve its own targets, and continues to revise them to higher standards.  Despite the downgrade, the City wishes to assure the

investment community and all its residents that all financial measures indicate an improved financial position.
 
The City remains operationally sound, liquidity performance remains above historic trends, and credit lines remain in place to cushion whatever unforeseen

events may arise. To date, the cash flow position is well above budgeted numbers, as evidenced by current surplus in excess of R2bn.  The City’s debt levels

have reduced substantially in the last three years and are reflected by the improvements (reduction) in the gearing levels.
 
The City’s fundamentals remain very sound, and the City is confident that management will achieve the goals of creating a resilient and financially

sustainable, and liveable Johannesburg!
 
Issued on behalf of Khomotso Letsatsi, Director of Treasury by:
Gabu Tugwana
Communication Director
Group Communication and Tourism
City of Johannesburg
Tel: 011 407-7162
Fax: 011 339-1531
Cell: 082 495 5673