CAPE TOWN – The City of Cape Town has welcomed Moody’s Ratings’ decision to upgrade its outlook from stable to positive, affirming Cape Town’s position as South Africa’s best-run metro and a leader in good governance, financial management and service delivery.

Tackling electricity challenges

The ratings agency has recognised Cape Town’s proactive efforts to reduce the impact of national electricity challenges through municipal power procurement, energy diversification and local generation initiatives. According to the report, these measures have reduced Cape Town’s exposure to national electricity shortages “relative to the sovereign and most peer metropolitan municipalities”.

A strong credit profile

Moody’s has affirmed Cape Town’s Ba2 long-term issuer rating and highlighted the City’s “strong and resilient standalone credit profile”, together with “sound financial governance” and “prudent financial planning”.

“Positive ratings are good for the City as it means it can access loan funding at favourable rates. This is especially important as the City continues to roll out its record R40 bn infrastructure plan,” said Siseko Mbandezi, the City’s Mayco member for finance.

Robust finances set Cape Town apart

The ratings agency noted that Cape Town continues to demonstrate “consistently robust operating performance”, supported by exceptionally high revenue collection rates of around 98%, strong cash reserves, low debt levels and a diversified local economy driven by sectors such as tourism, logistics and services.

The agency also highlighted the City’s strong liquidity position, prudent debt management and transparent financial reporting as key strengths that continue to distinguish Cape Town from other metros in South Africa.

“This positive outlook from Moody’s is a strong vote of confidence in Cape Town’s governance and resilience. While many metros are under severe financial and service delivery pressure, this City of Hope continues to manage public finances responsibly, invest in critical infrastructure and work proactively to protect residents and the local economy from national risks,” said Mbandezi.

The bigger picture: rating tied to the sovereign

Moody’s documentation makes clear that Cape Town’s rating does not exist in isolation. The City’s Ba2 long-term issuer rating is directly linked to South Africa’s sovereign credit rating, meaning a national downgrade would inherently affect the City’s rating, regardless of its own financial performance.

On the national front, there is some encouraging momentum. Moody’s has noted an improving macro-economic environment, supported by a rising primary surplus and stabilised debt-service costs, factors that have contributed to the country’s own positive sovereign outlook upgrade.

For Cape Town, the combination of improving national fiscal trends and the City’s consistently praised internal fundamentals, including robust liquidity reserves, consistent operating surpluses and strong structural tax collection rates, positions it well within the broader sovereign framework.

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