City of Cape Town receives thumbs up from major ratings agency
18 March 2019
The ratings agency Moody’s has changed its rating of the City of Cape Town municipality to stable due to its ground breaking management of the drought crisis and its efforts to avert Day Zero. Read more below:
The City is extremely happy with the change of the rating from negative to stable due to its successful management of the extraordinary drought crisis that Cape Town has emerged from, as per Moody’s report. The ratings agency also views the development of the City’s Draft Water Strategy as favourable. The latter public participation period for comment closed on Friday 15 March 2019.
The Moody’s report affirms the City's Baa3/Aaa.za ratings which are underpinned by Moody's view that the City administration will maintain its historically robust financial performances as well as its conservative debt management.
Good rating opinions are crucial for prudent financial planning as the better the rating, the lower the interest charged on debt.
Moody's also expects the City to maintain its robust liquidity profile in the next three years despite the intention to fund 34% of its capital expenditure from its own funds. Debt levels will remain lower than its rated peers in the country, the report states.
Almost 50% of its R25 billion capital expenditure plan will be invested in water and sanitation infrastructure including ongoing water intervention strategies, which is intended to further insulate Cape Town from future shortages, reads the report.
‘This rating and analysis is great news for Cape Town, its residents, businesses and investors. It shows that the City administration is moving in the right direction to enhance Cape Town’s future resilience while at the same time, it acknowledges that this City as well as its people overcame one of the greatest crises in its history. It was able to do so because of the strong management of the metro, its level of professional skills and spirit of partnership that saved the day,’ said the City’s Mayoral Committee Member for Finance, Alderman Ian Neilson.
For the 2017/18 financial year, the City received its 15th unqualified audit opinion from the Auditor General – a feat of note for a South African municipality.
Please see https://www.moodys.com/research/Moodys-revises-the-outlook-of-the-City-of-Cape-Towns--PR_395926
Issued by Ian Neilson, Executive Deputy Mayor, City of Cape Town, 18 March 2019
