City of Cape Town gets highest credit quality rating

Cape Town - The City of Cape Town announced on Thursday it has received the highest possible level of credit quality from ratings agency Moody's within the national context.

Moody’s announced that the City of Cape Town 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. This followed a change in their ratings methodology.

According to the City, this means that going forward there should be less volatility in the City’s national scale rating. This would be the case even when the global scale rating is moved either up or down and is, therefore, more reflective of the City’s own credit quality within the local environment, according to the City.

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,’ explained 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 agency added that the financial position is supported by what it regards as "the administration's prudent financial policies and its relatively large and diversified economic base".

Ratings Afrika recently awarded the City the highest Municipal Financial Stability Index (MFSI) among the metros.