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Tuesday Oct 30, 2012

Durban gets high credit rating

Despite the global financial downturn and recent economic unrest, the eThekwini municipality has once again obtained the highest possible debt rating available to it.

Global Credit Ratings, the agency responsible for evaluating the city's creditworthiness, awarded it an AA-rating, it announced on Friday.

Marc Joffe, a director at the agency, said the debt rating had been at its highest attainable level, in the municipal sector, for the past 10 years. A rating of this nature was crucial for any borrowing it undertook.

"It is extremely important for their capital expenditure programme," he said. "The rating allows them to borrow at a relatively low level."

The city had a robust financial profile that was "characterised by strong cash generation and high liquidity levels", the agency said.

Commenting on the rating, city treasurer Krish Kumar said it showed the success of the financial management structures in place, and that there was confidence in the metro.

Kumar shared Joffe's sentiments on the ability to access finances.

"The credit rating allows us to borrow at a better interest rate," he said.

According to Kumar, the rating was not the only feather in Durban's cap. "We have the highest collection rates [in the country] this year," he said.

"For us to maintain this rating is very good," Kumar added, considering the current economic unrest.

Cape Town also obtained an AA-rating from Moody's.

While eThekwini is evaluated by Global Credit Ratings - a service the city pays for - Cape Town, Ekurhuleni, Joburg, Nelson Mandela Bay (Port Elizabeth) and Tshwane (Pretoria) are assessed by Moody's.

The Mercury


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