The DA-led City of Tshwane has botched an opportunity to alleviate tough financial conditions at the South African capital with a planned bond auction last Tuesday following a procedural error.
Tshwane was forced to cancel its first bond auction in five years, with bids amounting to about R2.1-billion, after it failed to comply with processes required by the auditor-general.
The city had said that it would use the funds it intended to raise to finance capital expenditure, although details were not disclosed.
After the city went to market, the auditor-general’s office refused to issue a "letter of comfort", which would have allowed the auction’s completion. A letter of comfort provides a level of assurance that an obligation would ultimately be met.
Tshwane city manager Moeketsi Mosola told Business Day that "the successful bond placement by the City of Tshwane was cancelled due to process requirements by the office of the auditor-general of SA, which could not be concluded in time, and it has nothing whatsoever to do with the financial position of the city".
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