Credit rating agency, Global Credit Rating (GCR), has revised the City of Joburg’s rating outlook from stable to “rating watch negative” over the metro’s delays in finalising its annual financial statements.
The rating watch negative was due to “material uncertainty in the audit process, as highlighted by the continued delay in finalising the annual financial statements for the year ended June 30 2025, which are expected to be released by no later than May 31 2026”, the GCR said.
A rating watch negative meant the city’s credit rating was under review for a potential downgrade in the near term, usually within 90 days. The action indicated increased risk such as deteriorating financial performance, regulatory issues, or economic instability.
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The GCR was acquired by rating agency Moody’s in July 2024, in a move described as expanding Moody’s investment in Africa’s domestic credit markets.
The GCR said it continued to engage with South Africa’s largest metro and the country’s economic and financial hub and would update the rating “once the annual financial statements are finalised and the impact of the disputes on ongoing financial performance can be assessed”. The city has been approached for comment, which will be added once received.
‘Severe implication’
EFF Gauteng communications officer Dumisani Baleni said: “This decision has severe implications for the financial position of the City of Johannesburg. It has already resulted in the Johannesburg Stock Exchange (JSE) suspending trade in the city’s bonds, thereby limiting its ability to raise debt.
“Consequently, the city will face higher borrowing costs, forcing it to divert resources from service delivery towards debt servicing, to the detriment of residents.”
Baleni said the failure to release audit reports within the prescribed timelines “undermines the credibility of audit outcomes and borders on the manipulation of financial reporting processes. This must be decisively addressed to restore confidence in the institution and protect the financial stability of municipalities”.
This comes after Business Day reported last week that the decision by the JSE to suspend the city’s listed debt securities was a technical compliance matter related to reporting timelines and not an indication of financial distress or instability.
This was after the bourse said it had suspended Johannesburg’s debt securities with immediate effect from March 27 after the municipality failed to “comply with the JSE’s debt and specialist securities listings requirements”, which required that the municipality publish its audited annual financial statements for the year ended June 30 2025 within the prescribed period.
The JSE last month warned it would suspend the bonds of the Johannesburg, Ekurhuleni and Cape Town metros if they failed to submit audited financial statements by the end of February.
The metros laid the blame on the auditor-general saying the delays in filing their 2024/25 financials were due to disputes lodged with the chapter 9 institution.
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