Bay's debt levels move to stable

MOODY'S Investors Service has given the Nelson Mandela Bay Municipality a pat on the back for strengthening its financial performance after the 2010 cash crisis and decreasing its debt levels from negative to stable.

The country's only metro to improve its financial outlook, the Bay is well on its way to repaying all its debt incurred in hosting the 2010 Soccer World Cup.

The ratings agency said the municipality's liquidity position had improved.

The Bay's credit rating is now on the same level as that of the City of Cape Town and the Ekurhuleni Municipality, both of which were downgraded.

Moody's expects the Bay's finances to be "in line with those of Cape Town and Ekurhuleni in 2014, while the latter two are projected to moderately increase their debt in the medium term".

Municipal chief financial officer Trevor Harper said the positive feedback from Moody's was an indication that the city was well on its way towards bouncing back from the 2010 financial crisis.

"What they are saying is that by 2016, the money we owe [in loans] will amount to 15% of our total income. It means we are repaying our debts nicely and not borrowing any more money."

The metro had not borrowed any money since 2010.

It has had two consecutive qualified audit opinions, "and we're probably going to have another one [for 2013-14]".

"Hopefully we will be able to improve our audit outcome in the next financial year so that we can borrow again [for infrastructure]," Harper said.

"We can borrow money at the moment, but because of our audits it becomes too expensive to pay back the money." - Rochelle de Kock