Africa-Press – South-Africa. The City of Johannesburg has had its credit rating outlook downgraded by the Global Credit Rating Company (GCR) due to material uncertainty in the audit process.
This audit process has been hit by several delays, with the city yet to publish its annual financial statements for the year ended 30 June 2025.
Apart from raising questions regarding the city’s finances, the delay has already impacted its access to South Africa’s capital markets.
The delay in releasing its financial results has led to the JSE suspending trade in the City of Johannesburg’s bonds, which also prevents it from issuing new debt.
On 10 April 2026, the city notified bondholders via the JSE’s stock exchange news service that GCR has downgraded its credit rating outlook to negative from stable.
GCR is wholly owned by the global credit rating agency Moody’s, which makes its outlook important for investors looking to invest in Joburg’s debt.
The change in outlook to negative means that, as things stand, the next move in Joburg’s credit rating from GCR is likely to be a downgrade.
A downgrade in the city’s credit rating will impact its access to financing on the JSE and result in it having to pay a higher interest rate to investors to hold its debt, increasing the cost of borrowing.
This will further squeeze the city’s finances, with more money having to be directed to debt-servicing costs and not towards service delivery.
“Bondholders are hereby advised that the credit rating agency, GCR, has placed the city’s national scale long-term and short-term issuer rating on Rating Watch Negative, having revised the rating outlook from stable,” the city said.
“GCR has indicated that the Rating Watch Negative on the city is due to material uncertainty in the audit process, as highlighted by the continued delay in finalising the annual financial statements for the year ended 30 June 2025.”
The city said its financial statements are being finalised and are expected to be released by no later than 31 May 2026.
“The city is currently finalising its audit with the Auditor-General of South Africa, including resolving technical accounting matters through a standard dispute resolution process.”
The city explained that this is a technical issue that does not indicate it is in financial distress or cannot pay back its debts.
It also said its service delivery is not affected by the suspension, as it can fund its operations through revenue collection.
“The City has a strong track record, having redeemed R9.9 billion in bonds (COJ01–COJ07 and COJG01). Only R1.44 billion (COJ08) remains, scheduled for redemption on 22 June 2026,” it said.
“This process is about ensuring accuracy, compliance, and transparency in audited financial statements – not financial instability.”
Joburg’s finances under pressure
Joburg Mayor Dada Morero
The City of Johannesburg has the largest budget of any municipality in South Africa, with it set to spend over R90 billion in the current financial year.
This comes largely as a function of the city’s population density and its role as South Africa’s economic hub, with it home to the headquarters of many JSE-listed companies.
However, over the past decade, amid increased leadership instability at the municipality, this budget has been mismanaged.
The city has most notably increasingly spent its budget on consumption, largely in the form of salaries, and not on investments in maintaining or upgrading infrastructure.
This has led to sporadic water and electricity outages across the city as infrastructure fails under increased load from a growing population.
These outages also negatively impact the city’s revenue collection, along with increased investment in alternatives to city-supplied electricity and water.
As businesses and households invest in alternatives such as rooftop solar, less electricity is used through the city’s grid, resulting in it collecting less revenue in the form of tariffs.
This has been compounded by a rising culture of non-payment in the city, with The Outlier’s data showing that at the end of 2025, Joburg had R71.9 billion in unpaid bills.
These bills stem from non-payment from residents, businesses, and state entities.
Of major concern for the city is that 70% of these bills are more than a year old, indicating that this revenue is unlikely to ever be recovered fully.
The city is also failing to meet its own collection targets. It billed R37.2 billion between July and December 2025, but only collected R31.9 billion for rates, water, electricity, and refuse removal.
It has tried to implement debt-relief programmes and compliance enforcement, but previous programmes failed dismally.
In December 2025, disconnection drives for electricity and water recovered only R140 million against R4.5 billion in identified arrears, casting doubt on whether this latest effort will succeed.
The breakdown of outstanding debt owed to the City of Johannesburg at the end of 2025 can be seen in the graph below, courtesy of The Outlier.
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