CITY OF TSHWANE METROPOLITAN MUNICIPALITY - CTMM - Moody's Rating Action

CTMM - Moody's Rating Action

THE CITY OF TSHWANE METROPOLITAN MUNICIPALITY
(A municipality as described in section 2 of the Local Government Municipal Systems Act, 2000, duly
established in terms of Notice No. 6770, promulgated in the Provincial Gazette Extraordinary of 1
October 2000 in terms of section 12(1) read with section 14(2) of the Local Government : Municipal
Structures Act, 1998, as amended)
(Issuer code: CTMM)
(“City of Tshwane” or the “Issuer”)

MOODY’S RATING ACTION

Moody’s has on 01 April 2020 affirmed the Baseline Credit Assessment (BCA) of Ba1 and long term Global
Scale Ratings (GSR) of Ba1 for City of Tshwane and changed the outlook to negative from stable. This
follows the recent Moody's downgrade of the Government of South Africa rating to Ba1 from Baa3 with a
negative outlook on 27 March 2020.

Moody’s noted that the affirmation of City of Tshwane's Ba1 ratings reflects improvement in its liquidity profile
and declining debt levels. Moody’s noted that City of Tshwane's cash and cash equivalents balance
improved from ZAR3.4 billion in 2018 to ZAR4.8 billion in 2019, while debt levels to operating revenue
declined to 32% in 2019 from 34% in 2018 and the Issuer projects its debt levels to further decline in the
next three years.

Moody’s also noted that the City of Tshwane posted an improved gross operating balance to operating
revenue of 8.5% in 2019 from 7.4% in 2018, the Issuer has a flexible debt structure which consists of 20%
bullet bonds maturing in 2023 and 2028 and that both bonds respectively are covered by sinking fund
investments while 80% of the total debt consist of amortising debt profiles.

Moody’s further noted that the change of the outlook to negative from stable mirrors that of the sovereign
rating. Moody's also affirmed City of Tshwane’s baseline credit assessment of Ba1 and the long term
National Scale Rating (NSR) of Aa2.za. Moody's has also lowered the level of support coming from the
supporting Government for the City of Tshwane's to low from moderate.

For additional details on the ratings action please see the press release by Moody’s on 01 April 2020 titled
“Rating Action: Moody's takes action on 8 South African sub-sovereign issuers”

Following the recent updates, the City’s current Credit Rating is as follows as per the Moody’s report:

 Rating type      Long term         Short term      Category             Rating outlook     Rating action

 Issuer           Aa2.za            P-1.za          Investment grade     Negative           Affirmation

Johannesburg

02 April 2020

Debt Sponsor
Absa Bank Limited (acting through its Corporate and Investment Bank division)

Date: 02-04-2020 05:40:00
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