The Mangaung metro has suffered another credit ratings downgrade. Rating agency Moody’s has downgraded the municipality, just five months after downgrading it to B3.
Moody’s has now classified the metro as a high risk for investment, moving it to CAA 1.
The rating agency has cited poor governance and management as the cause of the downgrade.
It says the municipality has missed debt service payments on two loans worth more than R50 million.
The Mangaung municipality became the first metro in the country to be downgraded by a ratings agency in August 2019.
In December 2019, it was placed under administration.
Economist from the Central University of Technology Mgcinazwe Zwane says Moody’s decision is a cause for concern.
“That means we are able to be assisted with investment by any funders who might be interested in funding us. The second one is that we are defaulters. We are bad debtors; we don’t pay our debts as promised.”
Residents have lost confidence in the Mangaung metro.
Chairperson of the Local Organising Committee for residential areas of Vista Park and Elrichpark Owen Seata says residents now want to take matters into their own hands.
“It was actually a great disappointment to us. Basically, we have lost hope.”
Mangaung Municipality Spokesperson Qondile Khedama has expressed disappointment with Moody’s decision.
“It is unfortunate that Moody’s did not wait for the administration. You will remember that there has been intervention that has been made by the province. The premier has a team to assist the municipality. Central to the assistance we are going to get from the administrator is making sure that the recovery plan is being implemented.”
The Metro plans to engage Moody’s on the latest rating.
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Source: SABC News (sabcnews.com)