Herman Mashaba to update public after bad news on Joburg’s credit rating

14 July 2019 - 18:08Johannesburg mayor Herman Mashaba says he will provide details on the city’s “improving” finances this week in the wake of the decision by GCR Ratings to place the city’s credit rating on a negative outlook, citing concerns about its liquidity position.

SA’s largest city, which accounts for about 15% of the country’s economy, has been grappling with a billing and revenue collection crisis. Fixing the crisis was a key campaign promise of Mashaba, who took over the reins of a minority DA-led coalition government after the 2016 local government election.

GCR said in a statement that the metro is still grappling with “persistent high gearing and weak liquidity”. The ratings agency kept the metro’s long- and short-term ratings unchanged at AA and A1+, respectively. While net debt to income was moderate at 33.8%, cash flow-based metrics were weaker. “Liquidity is a rating weakness, as the City of Johannesburg’s cash holdings have trended downwards since financial year 2014 due to persistent working capital absorption.”

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