Running out of money: Johannesburg pays investors R1.44 billion

The City of Johannesburg, which is on the verge of financial collapse, put investors at the front of its queue of creditors this week when it repaid a R1.44 billion bond. 

The city, South Africa’s biggest, owes state power and water utilities hundreds of millions of dollars and is facing a threat of power cuts due to unpaid bills.

The councillor responsible for transport this week issued a statement saying there was no money for fuel, so all road repairs have come to a halt. 

South African Finance Minister Enoch Godongwana has also threatened to stop R8 billion in state funding because the city signed a R10.3 billion wage deal that he says is illegal and unaffordable.

He gave Johannesburg Mayor Dada Morero until Friday to give reasons why the funding should not be withheld.

The bond, which had an annual coupon of 11.455%, was issued in 2016 as part of the city’s R30 billion domestic medium-term note program, which has now been fully redeemed, according to a notice sent to Bloomberg by the JSE.

The bond had earlier been temporarily suspended because the city had failed to meet a deadline for submitting its annual results.

“The City is indeed maintaining discipline in its debt servicing commitments, even in the midst of a constrained fiscal environment,” Loyiso Masuku, the city councillor responsible for finance, said in a press release. 

Tebogo Moraka, the Johannesburg municipality’s chief financial officer, told lawmakers on June 9 that the city is planning new bond sales to fund repairs to infrastructure. The city has said it has a R220 billion maintenance backlog.