GCR has upgraded the Municipal Council of Mbabane’s (“Mbabane”) long and short term national scale Emalangeni currency credit ratings by one notch each, to BBB+ (triple B plus) and A2 (single A two) respectively. Mbabane is the capital city of Swaziland.
Primary factors supporting the improved ratings include Mbabane’s status as the administrative capital of Swaziland (housing central government), as well as its relative importance to the Swaziland economy. Whilst borrowings and key gearing ratios have been well contained over the review period, gearing metrics are expected to increase somewhat in the short term, as Mbabane takes on new loans to finance its operational and capex funding requirements. These are, however, expected to be maintained at a manageable level. The notable increase in cash holdings and key liquidity ratios over the past few years was also favourably considered, albeit that cognisance was taken of the fact that liquidity has significantly benefited from unspent government grant funding.
In view of council’s ongoing turnaround strategy, the improved operating performance in recent years was also positively considered. However, in the absence of reasonable support from central government, several key components of the strategy are deemed unattainable.
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.