The rating agency's report is an update to the markets and does not constitute a rating action.

"Cape Town's ratings reflect the strong cash flows it has generated over the last few years, underpinned by its consistent revenue collection. This has helped to strengthen its liquidity profile and avoided new debt in 2011 and 2012," says Kenneth Morare, Moody's lead analyst for the City of Cape Town. The rating agency also notes that continued fiscal consolidation in 2010-12 (following economic crisis) strengthened the city's financial performance. The city reported a gross operating margin of 8.1% and a cash financing surplus of 4.7% in FY2012.

Preliminary figures show that the City of Cape Town's debt levels fell to ZAR4.8 billion (USD549 million) for the financial year ending (FYE) 30 June 2012, or 22% of its annual operating revenue. "Going forward, however, we expect that debt levels will rise moderately to finance the city's large capex programme in 2013-15," adds Mr Morare.

Based on total revenue of ZAR23.7 billion (USD2.7 billion) as at 30 June 2012, Cape Town is the second-largest city in South Africa. It is the capital city of the Western Cape Province and has a population of 3.5 million. Unemployment level hinges around 22% and compares favourably to the national one of 29%.

Moody's annual credit report on the City of Cape Town is now available on www.moodys.com.

Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in October 2012 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings.

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Kenneth Morare Analyst Sub-Sovereign Group Moody'sInvestors Service South Africa (Pty) Ltd. The Forum 2 Maude Street 2196 Sandton Johannesburg South Africa JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 David Rubinoff MD - Sub-Sovereigns Sub-Sovereign Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Investors Service South Africa (Pty) Ltd. The Forum 2 Maude Street 2196 Sandton Johannesburg South Africa JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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