The ratings agency Moody’s has announced that the City of Cape Town has received a long- and short-term Global Scale Rating of Baa2 and Prime -2 respectively and a long- and short-term national scale rating of Aaa.za and Prime -1.za respectively following a change in their ratings methodology. The City now has the highest possible level of credit quality within the national context. Read more below:
This means that going forward, there should be less volatility in the City’s national scale rating, even when the global scale rating is moved either up or down and is thus more reflective of the City’s own credit quality within the local environment. The inclusion of a global credit rating makes it more comparable with other entities on the international market.
‘In a sense, the City will be less constrained by the country’s rating. This is especially advantageous for the City as it plans to approach the external bond market in the future,’ said the City’s Executive Deputy Mayor, Alderman Ian Neilson.
Moody’s cites as a reason for its decision the ‘City’s good budgetary performance, strong liquidity position and moderate debt levels. The financial position is supported by the administration’s prudent financial policies and its relatively large and diversified economic base’.
This latest signal of confidence in the financial management of the City comes on the heels of the recent announcement by Ratings Afrika, which awarded the City the highest Municipal Financial Stability Index (MFSI) among the metros.