Tshwane’s financial headaches continue

Tshwane’s financial affairs continue to be a headache for management, as investor confidence and credit ratings face a knock.

This is caused by Tshwane’s failure to comply with pressure imposed by the Johannesburg Stock Exchange (JSE) to submit audited financial results by the end of February, seven months after the financial year-end of June 30, 2023.

The failure to submit the audited financial statement has forced Moody’s Investors Service to place Tshwane’s Caa2 long-term issuer rating, caa2 BCA and its Caa1.za NSR long-term issuer rating on review for downgrade.

Director Issuer Regulation at the JSE, Andre Visser, said Tshwane had failed to meet the deadline, however, there was an exemption for it to wiggle an extension out of the exchange to free itself from the punishment that the stock exchange may impose.

“Tshwane hasn’t published its financial information for the 2022/23 financial year. In terms of the Debt Listings Requirements and the Financial Market Act, the JSE is now obliged to allow the entity the opportunity to make written representations to the JSE on why the suspension of the listing of the debt instruments should not be affected.”

Spokesperson Selby Bokaba said the metro had met all of its commitments, including the obligation to submit the financial statements to the Auditor-General (AG)

“On Thursday, February 29, the city manager and the executive mayor were briefed by the Auditor-General’s representative about the audit outcome.

“We expected the signed opinion to be available later that day so that we can make the necessary submission to the JSE.”

Bokaba said however on Friday, March 1, the AG informed Tshwane that it required more time for quality checks on the opinion.

“They [AG] did not specify when the signed opinion would be delivered. Our CFO communicated this to the JSE.”

According to Bokaba, Tshwane was afforded more time to submit by the JSE.

“The JSE has informed Tshwane that we have until March 12 to submit the audited financials, and so we’re in contact with the AG daily to get the signed documents.

“We do not think there is a fundamental problem here – only a timing issue. This was occasioned by the decision of the city manager, on the advice of our audit performance committee, to ask for more time to quality check the financials.

“We believe this was the right call, although it should have been accompanied by a Stock Exchange News Service announcement. We’ve committed to the JSE to be far more diligent in our handling of price-sensitive information.”

The failure to adhere to the JSE’s February deadline has however plunged Tshwane into distress as its credit rating is under review.

Moody’s spokesperson Marija Vinceviciute said on March 6, Moody’s placed Tshwane’s Caa2 long-term issuer rating, Caa2 BCA and its Caa1.za NSR long-term issuer rating on review for downgrade.

The action to review stems from the metro’s failure to submit its audited financial statements to the JSE by February 29, 2024.

“The JSE announced on February 1, that both Ekurhuleni and Tshwane’s listing of debt securities and the registration of their programme memoranda would be suspended if they failed to submit their audited financial statements by this deadline, as stipulated in the JSE’s debt listings requirements.

“Although the timing of a potential suspension and the subsequent delisting of the notes is uncertain – in Moody’s view – the failure of the two cities to submit their audited financial statements has increased the risk of a debt acceleration should a de-listing occur and of potential defaults ultimately, given their weak liquidity position.”

ALSO READ: Avoid these streets today – planned march underway

Do you have more information about the story?

Please send us an email to bennittb@rekord.co.za or phone us on 083 625 4114.

For free breaking and community news, visit Rekord’s websites: Rekord East

For more news and interesting articles, like Rekord on Facebook, follow us on Twitter or Instagram