“The issuance of this bond is an important move for Ekurhuleni towards broader and diversified funding sources for infrastructure projects and capital expenditure,” Absa Capital’s Prasanna Nana said in a statement this month. Ekurhuleni Metro’s credit rating of Aa2.za by Moody’s is among the highest of the five metropolitan municipalities rated by the agency, underpinned by its relatively large economic base, moderate debt levels and traditionally conservative financial management. Absa Capital, which also arranged the inaugural bond issuance on behalf of the City of Johannesburg (in 2004) and the City of Cape Town (in 2008), acted as the sole lead arranger for the bond. “The area’s strong infrastructural growth in recent years serves to support economic expansion, while revenue management and enhancement projects by the municipality aim to improve income by an estimated R5-billion by 2016,” said Ekurhuleni Metropolitan Municipality chief financial officer Zakes Myeza. It is one of three metropolitan municipalities in Gauteng and houses a large industrial concentration accounting for 23% of the province’s gross geographical product, with manufacturing accounting for 28% of the area’s total production. 24 August 2010 SAinfo reporterWould you like to use this article in your publication or on your website? See: Using SAinfo material Industrial, manufacturing hub The bond was priced at 185 basis points over the relevant government benchmark bond (R208), resulting in a fixed coupon of 10.56%. It was nearly two times oversubscribed, attracting total bids of over R1.5-billion. Infrastructure assets form 90% of Ekurhuleni’s asset base and include road, electricity, water and sanitation networks. The Ekurhuleni Metropolitan Municipality, which comprises many towns in Gauteng’s East Rand, has become the third South African municipality to turn to the bond market to raise funds for its capital expenditure programmes, with the issuing of a 10-year fixed-rate R815-million bond. Ekurhuleni is the fourth-largest metropolitan municipality in South Africa with a population of almost 3-million people. It was established in 2000 with the amalgamation of nine East Rand towns and two councils. Infrastructure development An amount of R2.5-billion was spent on capital projects during the 2008/09 financial year and a further R1.8-billion during the 2009/10 financial year. A portion of the 2009/10 investment in infrastructure will be funded from this municipal bond.