Fitch maintains Nkangala District ratings

Apr 28, 2010

Fitch Ratings has affirmed the national long-term rating and long-term local currency ratings for South Africa's Nkangala District Municipality (NDM).

The agency has maintained the ratings at AA-(zaf) and BBB+ respectively and issued a stable outlook for both. It explained that while these indicate NDM's recent "robust budgetary performances", a number of improvements could help push both ratings higher.

These include coupling low debt with high operating surpluses and a "strengthening of management operations", Fitch stated. It also warned of a possible rating decrease, with this potentially being triggered by "considerable changes in the administration's financial policy or adverse changes of the funding system".

Fitch, which is based in London and New York and operates in over 150 countries, noted NDM's net debt fell to ZAR62 million (€6.29 million) in the year to June 30th 2009, while its operating margin for the same period remained steady at 85 per cent. It predicted debt will continue to fall in the years to come.