Moody’s SA rating spills over to municipal outlooks – except for Cape Town
Cape Town – Moody’s Investors Service on Wednesday confirmed the long-term global scale ratings of 10 South African regional and local governments with stable outlooks.
Moody’s said the latest rating action follows the potential improvement of the SA government’s credit profile, as reflected by the ratings agency’s recent decision to confirm SA’s Baa3 government bond ratings and assign a stable outlook.
Therefore, Moody’s decided to confirm the global scale ratings for the 10 regional and local governments due to this sector’s close financial and operational links with the sovereign.
Moody’s upgraded the national scale rating of the Nelson Mandela Metropolitan Municipality to Aaa.za from Aa1.za. The ratings agency said this was due to the municipality’s persistently low debt levels and strong liquidity profile relative to other rated peers in the country.
Moody’s confirmed the global scale short-term ratings of Prime-3 for the City of Cape Town, City of Ekurhuleni and City of Johannesburg.
As for the City of Cape Town, Moody’s assigned a negative outlook. It said the negative outlook relates to uncertainty over whether the city will be able to avoid “Day Zero”, where the water supply will be cut and residents would have to collect water from water stations.
Moody’s pointed out that revenue from water and sanitation sales, which has already declined by 5% in the current financial year, will be further impacted if Day Zero does take place.
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