Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
City of Johannesburg Investor Road Show
January/February 2011
1Contents
Road Show team
Overview of the City
Political Overview
Financial Overview
Revenue Performance
Funding Strategy
Bond Offering
2Road Show Team
Issuer – City of Johannesburg Metropolitan Municipality
Parks Tau MMC Finance: City of Joburg [email protected] 011 358 3662
Mavela Dlamini City Manager: City of Joburg [email protected] 011 407 7309
Mankodi MoitseGroup CFO and Executive Director Finance:
City of [email protected] 011 358 3619
Khomotso Letsatsi Director Treasury : City of Joburg [email protected] 011 242 1043
Mabandla SibisiActing Head of Dealing : City of Joburg
[email protected] 011242 1059
Lead Manager – Standard Bank and Basis Points Capital
Zoya Sisulu Debt Capital Markets - Standard Bank [email protected]
011 378 7032
Khulu Montshiwagae Head Treasury- Basis Points Capital [email protected] 783 6169
Overview of the City of Johannesburg
4Overview of the City
Key Facts
Land Area The City Stretches over 1,664km2
Population 3,8 million people
Households 1,3milliom
% of Provincial Population 37%
% of National Population
7%
% of National GDP Contribution of about 16%
Contribution to National employment
The City contributes approximately 15% of employment
Key SectorsFinance, Business Services andConstruction
The City Of Joburg was established in December 2000, it was the results of a merger of the Greater Johannesburg Metropolitan Council and its substructures namely the Northern, Eastern, Western and Southern Metropolitan Local Councils as well as Midrand and Modderfontein
The City is the most populous of South Africa’s nine metropolitan municipalities and remains the financial hub of the country
Johannesburg is a powerful commercial centre on the African continent with world class facilities including: telecommunications, electricity, broadcasting, clean water, Transportation infrastructure, health care, accommodation, office buildings, conference centres and recreational facilities
The City has set its sights on becoming a World-Class African city in which all residents can enjoy the fruits of economic growth and job creation and lead prosperous and healthy lives
5Governance Structure The City is one of two municipalities to pilot a new governance model allowing the City to refine , amongst others, the roles of the executive ,
council and administrative heads, level of decision making, accountability, institutional structures and the oversight of municipal entities by the respective core departments.
The key role of Council in the new structure is to focus on legislative, participatory and oversight roles. Council delegates its executive function to the Executive Mayor and the Mayoral Committee
Council’s principal role is that of law maker, to debate issues publically and to facilitate political debate and discussion
Section 79 oversight committees have been constituted and are chaired by non-executive Councillors
The portfolio committee’s primary responsibility is oversight of the executive arm of the City’s governance and to monitor the delivery and outputs of the executive
Source: City of Johannesburg Annual Report 2000/9
Legislature
Speaker
Chairman of Committees Chief Whip
Whips
IFP
Portfolio Committees Standing Committees
Community Development
Council
Transportation
Economic Development Health
Dev Planning and Urban Management Public Safety
Housing Infrastructure Development
Finance Economic & CorporateShared Services
Rules Petitions & Public Participation
Ethics/Disciplinary Standing Committee on Public Accounts
Programming PAC
CDP
UDM
ANC
OKM
CF
AZAPO
FF PLUS
Independent
ACDP
DA
ID
6Growth & Development Strategy Package
Analysis
Eco
n D
ev
Hu
man
De
v
Hou
sing
Infr
ast
ruct
re
Env
ironm
ent
Spa
tial D
ev
Tra
nsp
ort
Hea
lth
Sa
fety
Fin
ance
Go
vern
ance
Cor
p se
rvic
e
Proactive absorption of the poor
Balanced & shared growth
Facilitated social mobility
Settlement restructuring
Sustainability & environmental justice
Innovative governance solutions
6 principles cut across to inform analysis, vision and strategic choices organised in 12 Sector Areas
1. Long-Term Goals2. Long Term Strategic Interventions
bridging into …
3. Five-Year IDP Objectives4 Five-Year IDP Programmes
The GDS package …
Vision
7City Priorities – 2006 to 2011
The City’s vision is an expression of Johannesburg’s continued role as a wealth leader and opportunity creator – a role it has played for more
than a century. But it also emphasises the need to transform Johannesburg from a city where only a few enjoy the fruits of propsperity, while
the majority continue to struggle
The city’s vision will be driven by the following six core development principles
Core development principles
1. Proactive absorption of the poor The need of the poor must be prioritised and therefore will facilitate the transition of the poor, identified as new households , new internal and circular migrants, those in hostels, informal settlements and historical ghettoes, youth and refugees
2. Balanced and shared growth The City will continue to keep the cost of doing business as low as possible, but will also aim to ensure that the benefits of growth are shared more broadly
3. Facilitated social mobility and equality
Crucial to the City’s development that people are assisted out of poverty through shared growth and other measures
4. Settlement restructuring Includes bringing jobs closer to people and people closer to jobs
5. Sustainability and environmental justice
To become a more sustainable city buy anticipating and managing the effects of environmental change. Its means promoting environmental justice , as well as ensuring that quality of life is enhanced , by extending green infrastructure to areas that have historically functioned as grey and featureless dormitory
6. Innovative governance solutions The City recognises that the development challenges cannot be met alone. The City of Johannesburg is committed to finding joint solutions to these challenges by working closely with citizens, communities, business, all spheres of government and interested stakeholders
8Revenue Management
The City embarked on a aggressive credit control campaign
Approximately 30,000 accounts were subjected to the credit control
Of that 15,000 made arrangements to pay or paid in full
Challenge Expected Action
Deeds transfers not updated on the billing system
Investigate and correct the interface between LIS and the billing system.
Ensure updating of +- 10 000 records not on the billing system.
Manage exceptions from the error report from SAP
Adhoc confirmed address changes by LIS
Finalise and test the interface
Update physical and stand numbers changes confirmed.
Incorrect stand and physical addresses on the billing system
Extract of customers of accounts with the same addresses
Correct incorrect addresses
Exorbitant billing amountsPut controls not to release incorrect bills
Take disciplinary action for releasing incorrect bills
9
Challenge Expected Action
Implausible and outsorts Timely releasing of implausible and outsorts within 5 days
Estimated meters -Inaccessible
Move water meters on the boundaries
Convert inaccessible electricity meters to prepaid
Estimated meters (Faulty)
Replacement of meters
Investigate and correct the interfaces between MOE and R & CRM
Wrongly printed statements
Correct the ageing on the statements
Correct the consumption on the statements
Cancel the workflow for adjustment approvals.
Ensure proper control on adjustment capturing
Revenue Management
10Revenue Management
Challenge Expected Action
Printing errors Clear the workbench errors
Billing & invoicing logs Clear and resolve the logs
Incorrect CCMS disconnections amounts Investigate and correct the differences between CCMS and Billing system
Incorrect cut offs
Investigate updates of accounts loaded for disconnection
Develop business rules to validate accounts before sent for disconnection
e-Services not working Post all statements through Post Office
Incorrect Inner-City property zoning Investigate and update zoning
Prepaid Meters not showing/marked Investigate and update prepaid found
11Operational Highlights
16,000 housing opportunities created
Eradicated 17 informal settlements, 3 layout plans approved and formalised 3 informal settlements
More than 18,000 title deeds lodged to promote secondary property market
Implementation of programmes focused on education, prevention, ARV treatment, capacity development and wellness
Following the successful launch of phase 1A in September 2009 there has been a 52% increase in traffic numbers. Phase 1A 143 buses
ECA drawdown of $42 million on 27 Dec 2010
Implementation of Phase 1B included the 23km bus lane, 33 bus stations and 125 buses in operation
Exceeded targets for the increased provision of basic services
Electrification of more than 5,000 household unit in formalised areas
Daily cleaning of 119 informal settlements
Provision of free basic services to all indigent households
To assist poverty stricken households and individuals – more than 570,000 beneficiaries registered
Provide support with education, skills development and food supply, improving access to social grants, rehabilitation of homeless and displaced persons and the placement of job seekers
10kl free water to 188,000 indigent households
6kl free water to all households
Free basic electricity provided to 73,139 households in area supplied through City Power
Provision of Basic Services and Demand Side Management
Measuring poverty and the revised social package
Provision of Free Basic Services
Creation of Housing Opportunities HIV and AIDS awareness and support
Rea Vaya Bus Rapid Transit
Upgrading of the CBD and retail improvement
Investment of R1.6 bln through the Urban Development Zone
Increased participation of SAPS in strategic forums and crime prevention operations
Targeted enforcement operations to reduce crime incidents
Joint operations between JMPD, SAPS and other agencies resulted in 38,000 arrests for priority crimes
Fully operation CCTV Control Centre in the Inner City with 231 surveillance cameras, 6 patrol vehicles and 200 foot patrollers
203,403 trees planted
2 Soweto Nurseries development completed
Memorial Tree Programme introduced in 2008, 38,000 memorial trees planted to date
More than 200,000 beneficiaries reached through the tree education and awareness programme
Inner City Regeneration Crime Prevention Strategy Greening of the City
12Risks and Challenges
The City has identified the following risks and challenges:
RiskDetails
Economic environment Global recession impacted resident’s ability to pay resulting in increased use of legal
interventions for debt collection Financial sustainability addressed through the development and implementation of Financial
Strategy
Unemployment trends The City is addressing unemployment through the Joburg 2030 process as well as the Extended
Public Works Programme and especially by supporting labour intensive sectors. EPWP job creation targets of 120 000 we met with 153 834 jobs mainly contributed by construction sectors. Drive for other sectors to contribute is underway.
Housing demand Targeted housing delivery of 100 000 by 2011. 69 000 houses were delivered by 2009/10 and
11 000 will be delivered by 2010/11. Shortfall on housing delivery 20 000. Severely impacted by budgetary constraints, economic conditions and liquidity constraints in the banking sector
Infrastructure upgrades Electricity losses are approximately 13%, exceeding 5-year target of 12 mainly due to cable theft
and illegal connections Water losses increased from 31.4% in 2006/07 to 37.4% in 2009/10 against target of 30%, due to
lack of prepaid meters and suspension Gcin” amanzi Increasing demand for maintenance in roads & storm water infrastructure
Culture of non-payment Encouraging culture of timely payment , increasing accessibility of pay channels and customer
channels Programme Phakama to manage City’s revenue value chain from a single platform
Health Improve accessibility of health care and intensify fight against HIV/AIDS through implementation
of programmes and better co ordination with other spheres of governments
Public Safety Increased co-operation with counterparts in the province and SAPS aimed at reducing crime
Focused crime prevention programmes and addressing the social and urban environmental
factors that create opportunities for the perpetration of crime
13
13
City of Joburg: The big issues 2011
1. The trading services: Revenue enhancement and protection
– The ESKOM tariff juggernaut
– Electricity Supply grid: Elimination of power outages
– Service Demand Management
2. Economic investment
3. Green city plan: Global warming and impact
4. Transportation:
– Public transportation investment
– Congestion Management & reducing the cost of business
5. Clean City Waste removal 24/7 (Environmental Management)
6. Revenue collection and Financial prudence
– Customer relations enhancement
7. Development Planning
– Turn around of development planning processes
8. Inner city Urban Regeneration & Management and housing
9. Public Safety: Law, Bylaw enforcement and Policing function
14
14
Electricity IDP Plan
1. Load management interventions: Intake stations
2. Electrification in high demand /growth areas
3. Side Management (DSM) program
• Customer education program
• Alternative energy sources
• Advanced metering solutions
4. Electricity supply in developments approved as per IDP
• Reduction of power outages (systems failure)
• Installation of universal public lighting
• Reduction of Non Technical Losses
• Controlled Provision of prepaid meters
• Provision of adequate electricity capacity
5. Services Backlog elimination
Political Overview
16Local Government Elections
The term of office of current municipal Councils commenced on 01 March 2006 and ends on 02 March 2011
Elections should be held within 90 days after expiry of the lastelection, in this instance the 90 day period starts from 02 March 2011 and ends on 30 May 2011
The Minister of Local Government, after consulting the IEC will, by Notice in the Government Gazette, call and set a date for an election of all municipal councils
2011 Municipal Elections will take place in 8 Metropolitan Councils, 226 local Councils, 44 District Councils and 4277 wards
Voter Registration is Scheduled for 5 and 6 February
Election process
The re-determination of municipal boundaries and the delimitation of wards by the Municipal Demarcation Board resulted in structural change in a number of municipalities and Wards
A total of 278 municipal councils will be contested in 2011 municipal elections. It is a reduction of 5 municipalities from current number of 283 municipalities
The Number of wards according to MDB has increased from 3895 to 4277
Local Government Landscape Post 2011 Municipal Elections
17
Option 1: Outgoing council approves 2011/12 budget Option 2: Outgoing council prepares 2011/12 budget, new council approves it
1. Current Mayor prepares a budget schedule that brings the review of the IDP and the tabling of the budget forward to late February or the beginning of March 2011
2. Community consultations on the annual budget conducted in remainder of March and early April 2011
3. Officials complete technical work on annual budget by mid-April 2011
4. Current council approves annual budget before the end of April 2011
5. New council implements annual budget from 1 July 2011
1. Current mayor prepares a budget schedule that brings the review of the IDP and the tabling of the budget forward to early March 2011
2. Community consultations conducted in remainder of March and early April 2011
3. Officials complete technical work on budget during May and ensure that it is ready to be placed before council for approval by 1 June 2011
4. New council must consider budget as their first order of business, after electing the Mayor – and approve it before the start of the new financial year – 30 June 2011
Benefits of Option
Minimises risk of there not being an approved budget at the start of the financial year
Ensures continuity
Safeguards the financial sustainability of the municipality by ensuring tariff increases are locked in before the start of the financial year
Allows new council to approve and ‘take ownership’ of the annual budget
Risks of Option
New council may not be happy with the priorities set out in the annual budget approved by the outgoing council, and so be reluctant to be held accountable for its implementation
There is real risk that the municipal council may not be constituted, or may not get itself organised in time to approve the budget before the start of the municipal financial year, which will put the financial sustainability of the municipality at risk
New council may seek to introduce last minute changes to the tabled budget which will tend to undermine the integrity of the community consultation processes
Local Government Elections – Budget Process
All district councils are strongly advised to adopt option 1. National Treasury also recommends this option for metros and localcouncils, unless specific political circumstances suggest that it is important to allow the new council to approve the budget.
where specific local political circumstances suggest that it is important to allow the new council to approve the budget.
Financial Overview
19Financial Turnaround Strategy - Phases
Stabilisation Consolidation Sustainability
(1-2 years) (2-3 years) (>3 years)
Improve Liquidity levels− Citywide VAT review process−Sale of non-strategic property−Servicing old commitments on servitudes, land sales−Outdoor advertising
Implement revenue maximization initiative− Improve collection −Billing maximizations−Data clean up−Operational efficiencies−SAP Implementation (Phakama)
Managerial and institutional interventions− Establish institutional behavioural change through systematic implementation of expenditure review outcomes−Conduct an institutional review to assess capacity requirements
Sustainable development and service delivery− City wide roll out automatic meter reading and prepaid meters
Pursue alternative revenue sources in line with increasing service delivery demands
Cap spiralling expenditure− Strengthen City’s voice in intergovernmental debates especially regarding major costs−Slow down discretionary operating expenditure
Comprehensive infrastructure plan− Creation of an asset replacement reserve to ensure City assets are not stripped of useful value−Roll out the implementation of Infrastructure Maintenance Plans, linked to the Comprehensive Infrastructure Plan
Capital budget management− Find a balance between continued service delivery and management of debt to revenue ratio−Pursue alternative sources of funding−Maintain consistent levels of expenditure per household−Maintain a balance between Investment in productive economic infrastructure, basic needs and social facilities
20Financial Turnaround Strategy - Progress
Stabilization Phase
Key Deliverable Intervention Progress
Improve Liquidity levels
Citywide VAT review process Service provider has been appointed and work is underway. Completion expected in April 2011
Sale of non-strategic property Procurement processes in progress
Servicing old commitments on servitudes, land sales
Land parcels identified awaiting expression of interest Funds expected to flow by June 2011
Outdoor advertising Negotiations underway for new revenue packages for different advertisers. Up front payments expected by June 2011
Implement revenue maximization initiative
Improve collection Maintained collection levels in the face of recessionary environment. Collection
level of 92.6% achieved in 2010 compared to 91.1% in 2009
Billing maximizations and Operational efficiencies
Billing project team appointed in July 2010 to address all billing matters following Migration to SAP ensuring improved efficiencies across the revenue value chain
Data clean up Ongoing process
SAP Implementation (Phakama) All databases successfully migrated to SAP by June 2010 System has inbuilt error checks and save guards which have impacted timing of
billing
Cap spiralling expenditure
Strengthen City’s voice in intergovernmental debates especially
regarding major costs
City participation in forums such as the Cities Budget forum and various other debates e.g. engagements with NERSA on electricity tariffs, REDS debate (through IMFO)
Slow down discretionary operating expenditure
Expenditure review interventions resulted in overall reduction of proportion of City expenditure spent on general expenses and consultants
21
The City illustrated a sound 24% growth in total revenue, mainly as a result of increased grants and subsidies for the Soccer
World Cup
Expenditure growth of 13% is as a result of bulk purchases for water and electricity
Employee related costs remained well contained at 26% of operating expenditure
Financial Performance
Expenditure compositionRevenue composition
Source: City of Johannesburg Group - Draft Annual Financial Statements for the Year Ended 30 June 2010
22Financial Performance
Source: City of Johannesburg Group - Draft Annual Financial Statements for the Year Ended 30 June 2010
Statement of financial performance for the period ended 30 JuneBudgeted statement of the financial performance for the period ended 30
June
R’0002007
Actual2008
Actual2009
Actual2010
(Unaudited)2011
Budget2012
Budget2013
Budget
Total Revenue 15,884,175 17,959,812 20,491,790 25,153,400 26,308,874 29,261,396 32,779,602
Total Expenditure
14,289,388 16,005,490 19,724,684 22,151,687 25,164,848 28,086,212 31,596,679
Surplus / (Loss) 1,594,787 1,954,322 755,439 2,896,538 1,013,632 1,002,256 1,034,545
Budget growth in the medium term is expected to slow down as the City “cools off” after a period of sustained high growth
23Financial Performance
Total assets vs. borrowings vs. cash equivalents
Total assets grew by a moderate 7%, attributable to the capitalisation of some world cup related projects.
In 2010, R4.6 billion was spent on capex.
The City’s total interest-bearing liabilities increased by a conservative 7% from R10.4 billion in 2009 to R11.1 billion in 2010 as
a result of the efforts by the City to complete some of the capital projects in time for the Soccer World Cup 2010.
Source: City of Johannesburg Group - Draft Annual Financial Statements for the Year Ended 30 June 2010
Revenue Performance
25Annual Collection Rates
2009/10 financial year provided revenue collection of the City with unprecedented settings including
– the turbulent global economic environment and
– migration into the new system yet sustains the fundamentals of revenue collection.
Revenue collection exceeded expectation with a citywide total collection of R16.5 billion at a percentage rate of 92.7%
This can be attributed to multiple interventions including revenue maximization efforts and management of the panel of collecting attorneys to yield the desired output of increased revenue collection
In 2010/2011, the City plans to increase revenue collection to a minimum of R18 billion which represents a 9% increase from the previous year
Jun-10 Jun-09 Jun-08 Jun-07
BillingActual
ReceiptsJun-10 Billing
Actual Receipts
Jun-09 BillingActual
ReceiptsJun-08 Billing
Actual Receipts
Jun-07
R’000 R’000 % R’000 R’000 % R’000 R’000 % R’000 R’000 %
Revenue and CRM - Total
10,240.444 9,086,234 88.7 9,125,336 7,747,292 84.9 8,164,882 7,470,684 91.5 7.515,075 6,835,358 91.0
City of Johannesburg -Total
17,945,447 16,618,908 92.6 15,313,217 13,951,573 91.1 12,907,769 12,173,338 94.3 11,846,397 11,161,955 94.2
26Billing and Collection (5 months ended 31 December 2010)
DescriptionActual 2 months
ended August 10
Budget 2 months
ended August 10 Variance
Actual 3 months
ended November 10
Budget 3 months
ended November 10 Variance
Total Billing 3,036,146 4,004,576 (968,431) 6,571,672 5,346,916 1,224,756
Total Collections 2,783,981 3,775,191 (991,210) 5,385,500 5,015,260 370,240
27
Service0-30 days
%
31-60 days
%
61-90 days
%
Over 90 days
%
Total
R’000
Rates 18.69% 4.83% 5.55% 70.9% 2,977,703.00
Electricity 26.62% 6.84% 4.28% 62.3% 2,076,035.00
Water 11.69% 4.36% 4.36% 79.6% 4,168,432.00
Refuse 6.26% 6.01% 5.58% 82.1% 563,836.00
Housing Rental 2.58% 1.52% 1.32% 94.6% 229,574.00
TOTAL 16% 5% 5% 74% 10,015,580.00
2010 Consumer Debtors Age Analysis by Service Type
28Debtors Age Analysis for Metros
Metro 0-30 days
%
31-60 days
%
61-90 days
%
Over 90 days
%
Total
%
Nelson Mandela Bay
49.7 6.9 1.4 42.1 5.5
Ekurhuleni Metro 14.5 5.7 3.2 76.7 24.4
City of Johannesburg
26.9 3.6 2.1 67.3 29.8
City of Tshwane 25.2 2.6 2.0 70.2 10.5
eThekwini 22.0 5.2 6.4 66.4 14.8
Cape Town 19.3 5.4 3.1 72.2 15.0
TOTAL 23.1 4.7 3.1 69.1 100
Debtors Age Analysis as at 1st quarter ended 30 September 2010
Source: National Treasury Local Government Database
29Debt Serviceability
As anticipated, accelerated capital program has put pressure on prudential ratios
The City’s Financial Strategy aims to gradually reduce the debt to revenue to 46% in the medium term
2010 Unaudited 2009 2008 2011f 2012f 2013f
Salaries to Opex 26% 26% 26% 26% 25% 24%
Debt to Revenue 54% 54% 46% 50% 49% 47%
Current Ratio 0.61 0.66 0.78 0.84 0.99 1.19
Interest to Opex 7% 6% 5% 5.7% 5.75 5.0%
Source: City of Johannesburg Group - Draft Annual Financial Statements for the Year Ended 30 June 2010
Funding
31Medium Term Capex Spend 2009/10 – 2012/13
Category Budget year 2009/2010
Budget year 2010/2011
Budget year 2011/2012
Budget year 2012/2013 Total
(R millions)
Loans/borrowings 1,992 1,512 1,512 2,300 7,316
Grants and donations 2,627 1,090 2,181 1,829 7,727
Internally generated funds 855 457 278 279 1,869
Total Capex 5,474 3,059 3,971 4,408 16,912
The majority of the capital spend over the short to medium-term will be focused on improving City Power, Joburg Water and
transportation
In terms of the approved medium-term budget, the City's total external borrowing requirements from 2009/10 to 2012/13 is
approximately R7,316billion
Loans/borrowings form the bulk of funding for the 2009 /10financial year. To date a R 479mln facility has been arranged with
AFD (French Development Agency), the balance expected to be funded by the bond issue
The level of capital expenditure will continue to be based on principles of affordability, prudential indicators and sustainability
and reassessed continuously
Source: City of Johannesburg Medium Term Budget 2010/11 – 2012/13
32Funding Strategy and Debt Structure
Strategic focus to create a well governed and managed city
External borrowing requirements of approximately R 3.95billion from 2009/10 to 2011/12
The City will continue to seek innovative, cost effective and efficient funding mechanisms
Maintain diversity in funding sources and closely manage the debt maturity profile
The following instruments are being considered:
Long-term funding
Debt Capital markets
Development Finance Institutions
Project finance and PPP
Other project specific funding options e.g. ECAs
Bilateral loans
Bond switch
Short-term funding
Commercial Paper
General Banking Facilities
Long term liabilities
33Redemption Management
Municipal Bonds Outstanding
Issue Date Maturity dateNominal
R bln
COJ0230-Jun-04 15-Sep-16 1.00
COJ0326 –Apr-05 26-Apr-13 0.70
COJ0405-Jun-06 05-Jun-18 1.73
COJ0505-Jun-08 05-Jun-23 2.27
COJ0609-Dec-08 15-Dec-15 0.90
Total 6.60
Debt Maturity Profile
The City has carefully managed the issuance of bonds and CP such
that the debt maturity profile is well spread ensuring the City is not
under pressure when redemptions occur
A bond sinking fund has been established to further assist with the
management of the City’s bond redemptions
Currently a balance of R 1.475bln is available in the fund, following
the successful redemption of COJ01 (R 1bln) in April 2010
CP redemptions are managed similarly with grant receipts being
ring fenced to facilitate redemptions
In the current financial year R 1.017bln of CP has been redeemed
Remaining grant and levy allocations of over R 2bln will be used to
redeem outstanding CP
Commercial Paper Outstanding
Issue Date Maturity dateNominal
R bln
COJ04C* 8 - Jul -10 10 -Jan- 11 1.017
COJ05C 8 - Jul- 10 8 - Apr - 11 0.435
COJ06C 26-Aug-10 28-Feb-11 0.200
COJ07C 26-Aug-10 26-May-11 0.900
COJ08C 26-Aug-10 26 -May-11 0.148
COJ09C 15-Dec-10 17-May-11 0.702
Total 3.40
*Redeemed on 10 January 2011
Offering summary
35Credit Rating
Rationale:
The deepest and most diversified local economy of all the cities in the country
Considered the business capital and main financial and economic centre of South Africa
Good fiscal flexibility embedded in the current institutional framework
Stable outlook based on:
Expectation that the municipality will maintain a prudent financial policy
Although the debt burden will increase, it is expected to remain at a manageable level
Agency Description Long-term rating Short-term rating Outlook
Fitch Issuer Rating AA- (zaf) F1+ (zaf) Stable
Moody’s Issuer Rating Aa3.za P- 1.za Stable
36COJ Credit highlights
The City of Johannesburg was the first municipality to tap the South African Debt Markets. Since then COJ has been a pioneer in
the capital market funding of municipalities having issued retail bonds and commercial paper. the following factors set the City apart
as an issuer
Importance to the Countries Economic Development
As the largest municipality the City is of critical economic and strategic importance to South Africa
The City is a financial hub of the country and provides a vital gateway to the country and the African continent as a whole
Long Standing Reputation in the Debt Capital markets
The City has developed a strong reputation as an issuer, having consistently tapped the market since its debut bond in 2004
Established an externally managed sinking fund to facilitate redemption of the City’s bonds
Successful redemption of COJ01 in April 2010, this was the first municipal bond issued in the market
COJ has highlighted the importance of the DCM to is long term funding strategy
Strong Financial Performance
Strong Diverse economic base coupled with a strong tax base
Stable financial performance in recent years with signs of recovery following the 2008 crisis
Manageable debt burden and sound liquidity profile
Unqualified audit for 3 consecutive years
37
Issuer City of Johannesburg Metropolitan Municipality
Documentation Domestic Medium Term Note Programme
Issuer Rating Aa3.za/AA-.za
Offered Securities Senior unsecured notes
Structure of Notes Fixed Rate
Proposed Amount Up to ZAR [1.1] billion
Tenor (Maturity) [10]/[15] years
Companion / Benchmark Bond [●●]
Coupon (Dates) Payable semi-annually in arrears
Issue Date [●●]
Settlement Date [●●]
Listing JSE
Proposed Offering Summary
38
38
Think ahead. It wasn’t raining when Noah built the Ark
Engagement & Investor clarifications