The agency gave the council a long-term credit rating of A and of A1 in the short term.

Global Credit Rating senior analyst Marc Joffe said the rating was supported by the strength and diversified nature of the local economy and the fact that the council did not have a lot of external debt.

"It demonstrates a strong liquidity profile, with cash on hand, well above peer levels. The majority of the council's capital expenditure has historically been funded from internal cash flows and this is expected to continue ," he said.

Mangaung came into being after the 2000 local government elections. It incorporates the local authorities of Bloemfontein, Botshabelo and Thaba'Nchu and surrounding rural councils.

But Joffe said the council's credit rating had been affected by its poor debt collection profile

"T he relatively poor socioeconomic profile of the municipality, and more specifically the newly incorporated areas served to constrain the rating," he said.

Council spokeswoman Khadija Richards said Mangaung also had concerns about its growing debt book and had established a debt collection unit.

"Over the past year, we have achieved a 90% collection rate across Mangaung ," she said.