Fitch rates Nkangala BBB+

Fitch Ratings said it assigned South Africa's District Municipality of Nkangala an international long-term local currency rating of BBB+. This is the first international rating of a South African local government, the agency said.

Fitch also upgraded Nkangala's national long-term rating to A+(zaf) from A(zaf).

The outlook is stable.

The ratings reflect the municipality's strong operating surplus, its satisfactory - though declining -budgetary performance, its low level of debt and its robust liquidity position, Fitch said.

However, the ratings also take into account a reduction of the municipality's revenue flexibility following the replacement of locally buoyant taxes with national subsidies as of July, whose legislative framework has yet to be finalized, as well as Nkangala's low socio-economic indicators by international standards, the agency added.

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