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Moody's praises Cape Town's finances

Dec 13 2012 08:04 I-Net Bridge

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Johannesburg - Rating agency Moody’s on Thursday released its annual credit report on the City of Cape Town‚ in which it praised the city’s good budgetary results and liquidity position. 

It said the city’s rating of Aa3.za/Prime-1.za reflected its large and diversified economic base and its historically prudent financial governance‚ which led to good budgetary results and a sound liquidity position. 

"Cape Town's ratings reflect the strong cash flows it has generated over the last few years‚ underpinned by its consistent revenue collection. This has helped to strengthen its liquidity profile and avoided new debt in 2011 and 2012‚" says Kenneth Morare‚ Moody's lead analyst for the City of Cape Town. 

Moody’s said the continued fiscal consolidation in 2010-12 (following economic crisis) strengthened the city's financial performance. The city reported a gross operating margin of 8.1% and a cash financing surplus of 4.7% in FY2012. 

"Going forward‚ however‚ we expect that debt levels will rise moderately to finance the city's large capex programme in 2013-15‚" said Morare. 

The rating agency's report is an update to the markets and does not constitute a rating action.

 

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