Moody’s downgrades SA cities – what that means for households and businesses
Moody’s has downgraded five South African metros, making the cost of borrowing more expensive
Some of the downgraded municipalities may feel hard done by, according to economist Karen Heese
Moody’s has downgraded the City of Ekurhuleni, the City of Cape Town, the Nelson Mandela Metropolitan Municipality, the City of Johannesburg, and the City of uMhlathuze.
The sovereign credit rating agency downgraded Tshwane in June.
Moody’s cites liquidity pressure due to “material shortfalls in revenue collection” for its decision.
The downgrades make borrowing more expensive.
The Money Show’s Bruce Whitfield asked Karen Heese (an economist at Municipal IQ) what the downgrade means for households and businesses (scroll up to listen).
Many municipalities on that list would be correct in feeling it’s unfair… Ekurhuleni continues to get clean audits, Cape Town has generous cash reserves, and Johannesburg still has a respectable collection rate…Karen Heese, economist - Municipal IQ
Cape Town is posing questions, but it would be very unusual for a rating agency to reverse a decision…Karen Heese, economist - Municipal IQ
We’ll probably have lower levels of infrastructure rolled out… Those metros will probably be fine… It’s metros on the margin who will likely be pushed out…Karen Heese, economist - Municipal IQ
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