City Treasurer Jason Ngobeni

RELATED LINKS: City to launch new bond JOHANNESBURG is to issue a fourth municipal bond, with the funds raised being used to defray capital expenditure costs. Read more Joburg appoints bond lead managers THE city's fourth municipal bond is a step closer, with the appointment of Standard Bank as the lead manager and adviser for the issue. Read more Joburg shares expertise with other cities AFTER successfully issuing three municipal bonds, with a fourth on the horizon, Johannesburg hosted a conference to share its knowledge with other South African municipalities. Read more Doing a good job of selling the City THE head of the Joburg's new investor relations unit is up for a challenge, and believes she has got what it takes to put the sparkle in the city of gold. Read more Joburg appoints bond advisers to raise R6bn SEVEN banks will oversee the City's programme to raise funds through bond issues over the next five years. The issues are guaranteed success, as the underwriters will buy whatever is not snapped up by the market. Read more City of Johannesburg's bond issue THE launch of the first municipal bond in South Africa under new legislation received an overwhelmingly positive response from the market when it was launched in April 2004. Pegged at R1-billion, the bond is not guaranteed by the government nor secured by City assets. Read more Masondo upbeat on City's future LOOKING to past achievements and future challenges, in his State of the City address Executive Mayor Amos Masondo was confident Johannesburg was on a successful growth path. Read more Joburg is 'on the right path' THE Growth and Development Summit was a success, and proved that "the City was on the right track". Read more

Joburg's credit rating is on the up Johannesburg's financial standing is being given a thumbs-up, with a local agency raising its assessment on the City's long-term credit ratings. May 29, 2006 By Anish Abraham CREDIT ratings agency, CA-Ratings, has raised the long-term credit ratings of Johannesburg - a sure sign of the City's improving financial management prowess. The new rating was effective from 26 May. "These ratings are reviewed annually," says the City's Treasurer, Jason Ngobeni. "The City chose to have this done as it is in line with international standards and benchmarks." Better ratings mean the City is able to fund its capital expenditure programmes at a cheaper rate. Locally based CA-Ratings has upgraded Johannesburg's long-term credit rating from zaA to zaA+, while its short-term rating is affirmed at zaA1. These figures represent a stable rating outlook. "This impacts positively on our funding costs. It means the financial stability of the City continues to improve, while its credit risk is declining," Ngobeni said. The zaA+ rating will apply to the CoJ 01, CoJ 03 and the soon-to-be issued CoJ 04 municipal bonds. Bonds are issued as a way of reducing borrowing costs, increasing the investor base, and are a way of raising large sums of money that would not be obtainable through a single financial institution. According to Ngobeni, the CoJ 02 has an AA rating, as it is partially guaranteed by the International Finance Corporation and the Development Bank of South Africa. CA-Ratings has provided several factors to support its decision: Johannesburg has the deepest and most diversified local economy in the country, which is derived from the city's position as South Africa's business capital and the main financial and economic centre. A strong operating performance delivered a surplus after taxes of R1,1-billion, three times more than in 2004. Improvement in the City's billings systems allow for more complete revenue and strong improvement in collections. CA-Ratings has calculated the collection rate in 2005 to be 94,5 percent, slightly higher than the 93,6 percent average collection rate for the country's other metros. The City has maintained healthy cash balances over the last year. At year end the call deposits stood at R1,6-billion: R907-million serves as cash-backing for reserves, loan repayment and grants received; and about R678-million serves as the City's own discretionary funds. Debt burden remained moderate during 2005, with a debt-to-income ratio of 40 percent. However, debt levels are expected to increase due to some R9-billion being needed for capital expenditure. Although the debt-to-income ratio is expected to peak at 50 percent in 2009, CA Ratings believes Johannesburg's strong local economy will enable it to sustain higher debt than its peers with similar ratings. The ratings agency identifies several factors that act as constraints to better ratings: Large infrastructure backlogs in terms of development of new infrastructure, as well as the maintenance and replacement of existing assets. The City has unfunded post-retirement benefits of about R1,6-billion. The annual payouts are funded from operating income. However, the agency states that the City's relatively low staff cost relative to total expenses (compared with other metros) and its long-term funding plan for this liability mitigates the concern. Financial flexibility is currently constrained by the council's strategy to limit tariff increases to approximately CPIX, while large spending pressures might call for more aggressive increases. The City's operating expenditures are largely inflexible and of a fixed nature and can only be brought down through tight budgetary measures and improvement in efficiencies. Improved ratings also help reduce debt-servicing costs as a percentage of overall expenditure. According to Ngobeni, the City currently spends about five percent of its total expenditure on servicing its debts. "Our ceiling or cap for debt-servicing is at seven percent of overall expenditure," he said. Permission to use web site material Publishers may use material from this site free of charge, as long as: Credit is given to either the "City of Johannesburg website (www.joburg.org.za)" or to "Johannesburg News Agency (www.joburg.org.za)"; If the article is used online, a link is provided to the original article on this website; The name of the article's author is acknowledged; The webmaster is informed of how and where the material is used (fill in this brief online form). Johannesburg News Agency is operated by BIG Media at 011-484-1400 Print this Page E-mail this article to a friend Help using Joburg.org.za