City of Johannesburg - Global Credit Rating Co. Rating Recent Developments CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY (a municipality as described in section 2 of the Local Government Municipal Systems Act, 2000, duly established in terms of Notice No. 6766, 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 Bond Code: BIJHB Bond Code: COJ05 ISIN No: ZAG000054339 Bond Code: COJ07 ISIN No: ZAG000085044 Bond Code: COJ08 ISIN No: ZAG000137571 Bond Code: COJG01 ISIN No: ZAG000116708 Communication to Investors GLOBAL CREDIT RATING CO. RATING RECENT DEVELOPMENTS Global Credit Ratings Co. (GCR Ratings) has on the 11th July 2019 placed the City of Johannesburg’s (CoJ) rating on negative outlook and affirmed the national scale ratings of AA (ZA), and A1+(ZA) in the long term and short term respectively. GCR Ratings has cited the following positives: - CoJ’s strong profile is underpinned by its position as the centre of economic activity in South Africa, housing numerous domestic and international businesses, which in turn have facilitated more steady economic growth (on average). Nevertheless, the metro continues to grapple with high incidences of unemployment and poverty, despite the generally high levels of service delivery. - CoJ reports well diversified sources of income, with strong underlying growth in key income sources such as water and sewage income and rates. - Management processes remain sound as unqualified audit reports have been received over the review period. - CoJ has very strong access to capital and little maturity concentration, which mitigates against the highly geared gearing position. GCR Ratings has also alluded the persistent high gearing and weak liquidity in financial year 2018 as a significant rating weakness. In order to address the concerns raised by GCR the City has indeed seen significant improvement in the liquidity level through the implementation of the following initiatives in the financial year 2019: - Implementation of strict credit control processes - Reduction of uncollectable debt - Increase in the use of e-services - Continuation of city wide verification of electricity and water meters. Note holders are referred to GCR’s press release for any further information, available at https://gcrratings.com/announcements/gcr-places-city-of-johannesburg-metropolitan-municipalitys- rating-of-aaza-on-negative-outlook-due-to-liquidity-concerns/ 12 July 2019 Debt Sponsor Absa Bank Limited (acting through its Corporate and Investment Bank division) Date: 12/07/2019 10:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.