Ekurhuleni Metro’s credit rating is better than other municipalities in the country.
The municipality tabled, at its August meeting, the latest credit rating the metro received from Moody’s Investor Service, announcing that the metro’s credit rating stayed the same since October 2012.
According to the metro’s agenda of the meeting, Ekurhuleni, with a credit rating of Aa3.za, is at the high end of the South African metropolitan municipalities that are rated by Moody’s.
Other metropolitan municipalities have ratings between Aa3.za and Baa2.za.
Ekurhuleni’s debt and debt service levels being lower than other municipalities in South Africa, are the reason for the metro getting on the higher end of these credit ratings, stated the agenda.
The latest credit rating of Ekurhuleni was based on the 2012/13 audited financial statements and the same financial year’s monthly management reports.
The information from the agenda further states that a credit rating estimates the credit worthiness of a municipality.
It is made by credit bureaus, like Moody’s, on a borrower’s overall credit history and an evaluation of a potential borrower’s ability to repay debt.
These credit ratings are calculated from the company’s financial history, current assets and liabilities.
One of the credit strengths that Ekurhuleni showed in the 2012/13 financial year is an increase of 16% in its total revenue from the previous financial year.
The metro also has strong liquidity ratios, moderate debt, as well as good budgetary planning and conservative financial management.
One of Ekurhuleni’s credit challenges includes the management of the anticipated debt level.
The collection rate of money owed to the metro was 90,14% during 2012/2013 compared to the metro’s target of a 93% collection rate.
Another challenge is the high capital expenditure pressure for maintenance of the aged infrastructure.
