City of Ekurhuleni gets thumbs up from Moody’s
Gauteng premier David Makhura on Sunday congratulated the city of Ekurhuleni on being awarded the highest investment grade by Moody’s Investor Services.
“The investment upgrade of Ekurhuleni, which follows the recent positive credit rating of the city of Joburg, gives us the confidence that we are well on our way to building a globally competitive Gauteng city region,” he said.
Moody’s placed Ekurhuleni at Aaa.za/Prime-1 national scale rating, a four notch upgrade from a previous rating of A1.za/Prime-1.
The city also received a global scale rating of Baa2/Prime-2. The good credit profile in terms of Moody’s meant that Ekurhuleni had an “extremely strong” capacity to meet its financial commitments.
This allowed the city to raise debt at favourable rates putting less onerous debt repayment costs on residents.
Makhura said the ratings sent a positive message about good financial management and controls, performance, innovation, urban management, and sound administration of Gauteng cities.
“The fact that these ratings come in the midst of a difficult and volatile global and domestic economic outlook is even more encouraging,” he said.
The ratings demonstrated the important role cities played in national economy. Ekurhuleni contributed 25 percent to the province’s economy and six percent to the national GDP, while the city of Joburg contributed 16 percent to the GDP.
“The overall drive by the country’s national leadership is to ensure that South Africa remains a positive investment destination is important for all of us,” Makhura said.
Earlier, city of Ekurhuleni manager Khaya Ngema said the rating made it easier for the city to compete in the international bond markets as well as other project finance and investment opportunities to address infrastructure funding.
The rating reflected the city’s prudent financial management which also saw it awarded two consecutive clean audits, he said.
Ekurhuleni was rated at the high end of the range of South African municipalities. The municipal debt and debit service levels were relatively lower than the median of rated metropolitan municipalities, he said.
“EMM reflects its relatively large economic base, strong liquidity, and traditionally conservative approach to financial management. However, the ratings also reflect the challenges associated with growing, albeit moderate, debt levels,” Moody’s said in its report.
It noted the city’s diverse and resilient industrial base stretching from Springs to Wadeville and Isando and hosting world class manufacturers of glass, breakfast cereal, and steel.
The city and five of the entities, including Brakpan Bus Company (BBC) responsible for the municipal bus service in the eastern region, Ekurhuleni Development Company (EDC) responsible for social housing, and Germiston Housing received clean audits for two consecutive years.