Cape Town also gets Moody’s outlook upgrade

In-line with Moody’s Ratings lifting its sovereign outlook on the South African Government’s domestic and foreign-currency long-term issuer and senior unsecured ratings from stable to ‘positive’ last week, Moody’s has also upgraded its ratings outlook for the City of Cape Town to positive.

The city welcomed the move by the London-based ratings agency on Thursday.

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Moody’s affirmed both South Africa’s and the City of Cape Town’s Ba2 long-term ratings, however, these are still two notched below investment grade or still regarded as ‘junk status’.

Following its move on the country’s national outlook, the agency consequently lifted its outlook for the City of Cape Town, and several of SA’s listed banks and major insurers.

However, there was no change to City of Joburg’s outlook, with Moody’s just last month putting SA’s financial hub on review for possible downgrades from its current Ba3 rating (which is three levels below investment grade).

“The City of Cape Town welcomes 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,” the Mother City said in a statement.

“Moody’s 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’,” it added.

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Noting that Moody’s has upheld the city’s Ba2 long-term issuer rating, City of Cape Town highlighted the ratings agency’s comments around the city’s “strong and resilient standalone credit profile” in addition to its “sound financial governance” and “prudent financial planning”.

Cape Town Mayor Geordin Hill-Lewis also hailed the move in a post on X, saying it was the city’s “second credit ratings upgrade” for the current term of office.

“We’ve worked incredibly hard to become South Africa’s leading city and the regional example of good governance. Delivering services more cost effectively with financial transparency brings investment and JOBS to the Mother City.,” he said.

BREAKING: Cape Town earns another Moody’s Ratings upgrade!

This is Cape Town’s second credit ratings upgrade during our term of office! We’ve worked incredibly hard to become South Africa’s leading city and the regional example of good governance.

Delivering services more… pic.twitter.com/ap9RRqwDH4

— Geordin Hill-Lewis (@geordinhl) May 29, 2026

“Positive ratings are good for the city as it means it can access loan funding at favourable rates,” commented City of Cape Town’s mayoral committee member for finance, Councillor Siseko Mbandezi, in a statement.

“This is especially important as the city continues to roll out its record R40 billion infrastructure plan,” he added.

“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.

According to the City of Cape Town, Moody’s noted that the metro continues to demonstrate a “consistently robust operating performance”. This, it said, is 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.”

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Outlook on banks 

Moody’s also changed its outlook on the long-term deposit ratings of five South African banks from stable to positive.

Absa, Investec, FirstRand, Nedbank and Standard Bank saw an improvement in their senior unsecured and issuer ratings, reflecting “an improvement in the operating environment” in South Africa.

According to the agency, its decision to affirm the banks’ ratings is supported by their earnings-generating capacity, as well as their liquidity and capital buffers.

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