Moody’s Investors Service on Wednesday downgraded the City of Ekurhuleni’s credit ratings into further in ‘junk’ status. File image: IOL.
Moody’s Investors Service on Wednesday downgraded the City of Ekurhuleni’s credit ratings further into ‘junk’ status.
This rating comes as the City failed to to submit its audited financial statements to the Johannesburg Stock Exchange (JSE).
The metro’s financial decline and weakening governance was also mentioned as a reason for the rating downgrade.
Moody’s lowered Ekurhuleni’s long-term issuer (domestic) and senior unsecured ratings to Caa2 from Caa1. It also lowered the City’s baseline credit assessment to Caa2 from Caa1.
Caa2 is eight notches into non-investment grade or junk status. It is also three notches below the highest junk status and is a reflection of a very high credit risk.
In response to the rating downgrade, the City issued a statement and said that the rating downgrade by Moody’s was unsolicited.
Ekurhuleni said that it does not have an evaluation agreement with Moody’s and moreover said that it’s financial integrity was on a secure footing.
“We urge our stakeholders to focus on forthcoming reviews by our officially designated rating agency, scheduled after our annual financial statement release,” City spokesperson, Zweli Dlamini, said.
“We remain committed to transparent and responsible financial management, ensuring continued quality service delivery and development in Ekurhuleni,” he said.
“The City is currently considering its legal options to claim for reputational damage caused by the unsolicited review.”
The African National Congress (ANC) in Ekurhuleni said earlier this week that it was monitoring the deteriorating state of the metro’s financial issues.
The regional co-ordinator Jongizizwe Dlabathi said the ANC has been constantly monitoring the developments within Ekurhuleni and subsequently they undertook an assessment of the municipal performance, which according to him, raises serious concerns.
This comes after a brawl broke out at the Ekurhuleni council meeting after councillors from the ANC and Economic Freedom Fighters got into a fistfight, with water bottles and papers being thrown at each other on Thursday.
This was as the motion for a vote of no confidence against Ekurhuleni Mayor Sivuyile Ngodwana was being tabled. The incident resulted in Ngodwana’s phone being snatched during the brawl, but it has since been found.
The mayor is accused of failing to deliver services to the people of Ekurhuleni.
IOL Business
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