JOHANNESBURG - The city of Johannesburg says ratings agency Moody’s has changed the outlook on its debt to negative from stable.
Moody's affirmed Johannesburg's long-term issuer and debt ratings of Baa3 (global scale, local currency) and Aa1.za (national scale, local currency) and short-term issuer ratings of P-3 (global scale, local currency) and P-1.za (national scale, local currency).
Moody’s said positive factors underpining its credit opinion included the fact that Johannesburg is the largest city in South Africa with approximately five million inhabitants, meaning it has a large and robust tax base as shown by its ability to self-generate over 80 percent of its total revenue.
The city also has manageable levels of net direct and indirect debt relative to its operating revenue and Moody’s said it expected Johannesburg to maintain debt levels of 38 percent of operating revenue on average over the next three years.
The rating agency however said liquidity pressures facing the city had increased and Moody’s expected this would be the case going into 2019 as Johannesburg increased capital expenditure.
The city said it had, in order to address the concerns raised by Moody’s, set out on several key initiatives including implementing a revised and more effective billing management policy compliant with legislative prescripts and by-laws.
Johannesburg will also update and roll-out standard operating procedures for revenue processes to improve controls and systems, implement strict credit control processes, reduce uncollectable debt, develop a billing and payments portal, and icrease the use of e-services.