City of Joburg credit rating unchanged despite high unemployment

2014-07-19 09:41

The City of Joburg is financially stable, despite pressure from high unemployment and demographic growth, Fitch Ratings agency has said.

It maintained the city’s long-term local currency issuer default rating (IDR) at ‘BBB’ with a stable outlook, it said yesterday.

IDRs are used to indicate an entity’s vulnerability to default on financial obligations.

A ‘BBB’ rating indicates that expectations of default risk are currently low.

Fitch said the ratings reflected the city’s important status as SA’s largest city, and its sound management with a fair degree of sophistication.

The metropolitan municipality had successfully tested access to capital markets and had a strong and stable financial profile, with sustainable debt and improved liquidity.

“The ratings also take into account an operating environment that is under pressure from high unemployment and strong demographic growth,” Fitch said.

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