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\n The ratings agency affirmed Johannesburg\u2019s long-term issuer rating at Ba3 while revising its outlook to positive, ending a review that had previously placed the municipality at risk of a downgrade.
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\n The decision comes even as the city battles an unfunded budget shortfall of R2.1 billion ($117 million) for the current financial year, mounting debts to state-owned utilities and the possibility of losing R8 billion ($447 million) in national funding over a disputed wage agreement.
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\n Moody\u2019s said Johannesburg\u2019s rating reflects a balance between the city\u2019s resilient economic base, broadly stable operating performance and moderate debt burden, offset by weaker governance and funding challenges.
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\n \u201cThe confirmation of the City of Johannesburg\u2019s ratings reflects a balance between its solid financial and economic fundamentals, with broadly stable operating performance, and a moderate debt burden, offset by weaker governance and funding credit challenges,\u201d the agency said.
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\n Johannesburg is South Africa\u2019s commercial capital, contributing about 15% of the country\u2019s gross domestic product, making its financial health critical to both investors and the broader economy.
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\n Moody\u2019s cited the city\u2019s diversified economy, continued access to capital markets and government grants, stable operating performance and sustainable debt profile as key factors supporting the rating.
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\n The positive outlook also reflects Moody\u2019s expectation that Johannesburg\u2019s operating environment could improve alongside South Africa\u2019s strengthening sovereign outlook after the agency upgraded the country\u2019s credit outlook to positive in May.
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\n Governance remains the biggest challenge
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\n While affirming the rating, Moody\u2019s made it clear that governance remains Johannesburg\u2019s biggest weakness.
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\n The agency said an upgrade would depend on the city demonstrating sustained improvements in budgeting, financial monitoring and governance while addressing audit findings and strengthening institutional performance.
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\n Earlier this year, Moody\u2019s placed Johannesburg\u2019s ratings under review after delays in publishing audited financial statements led to the suspension of the city\u2019s debt instruments from trading on the Johannesburg Stock Exchange.
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\n The review raised concerns over transparency, governance and the city\u2019s continued access to debt markets.
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\n The city has since restored compliance with JSE debt listing requirements after releasing its audited financial statements, allowing the suspension of its debt instruments to be lifted. Officials said the development demonstrated the municipality\u2019s ability to meet its financial obligations despite the temporary disruption.
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\n Johannesburg officials described the rating action as a sign of renewed investor confidence.
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\n City Manager Floyd Brink said the affirmation confirms that the municipality remains financially stable while implementing reforms to improve governance and service delivery.
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\n \u201cThe affirmation of the city\u2019s credit rating, together with a positive outlook, is an encouraging endorsement of Johannesburg\u2019s financial resilience and economic strength,\u201d Brink said.
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\n Chief Financial Officer Tebogo Moraka said the city would continue strengthening financial management and governance to improve its credit standing.
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\n \u201cThe city views this rating action as an important milestone in restoring market confidence and reaffirming Johannesburg\u2019s position as South Africa\u2019s economic engine,\u201d Moraka said.
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\n \u201cThe administration will continue implementing reforms that improve governance, strengthen financial sustainability and support long-term infrastructure investment for the benefit of residents, businesses and investors.\u201d
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\n Although the positive outlook improves Johannesburg\u2019s prospects of a future ratings upgrade, Moody\u2019s indicated that sustained governance reforms and stronger financial discipline will be necessary before any upgrade is considered.
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