I. STATEMENT ON RATING
The Slovak Rating Agency hereby assigns the Capital City Bratislava the following rating:
| Long-term koruna rating | BBB+ (stable outlook)
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| Long-term foreign currency rating | BBB- (stable outlook)
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| Short-term rating | S2
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The Capital City Bratislava was assigned the long-term rating BBB+ (stable outlook) for the category of transactions in Slovak crowns, which is 1 level below the risk level of the State. In the category of transactions in foreign currencies the Capital City Bratislava was assigned the rating BBB- (stable outlook), which is also 1 level below the risk level of the State. The short-term rating of the capital city is S2, which is the best possible rating for entities with a long-term rating of BBB+.
Justification:
- The Slovak capital Bratislava lies at the crossroads of the most important European transport systems and strategic locations in a north-south and east-west direction with connections to Budapest, Vienna and Prague. Bratislava is one of the youngest capital cities in Europe. The capital is also a key centre for administrative, economic, political and social-cultural spheres of Slovakia. It is the seat of the President of the Slovak Republic, the National Council of the Slovak Republic, together with individual ministries and other central authorities. Bratislava is an independent urban unit covering an area of 367.5 km2 with a population of 482,672 (as of 26.5.2001). In terms of administration, the capital of Slovakia is divided up into five districts, Bratislava I - V. The City of Bratislava has a very well diversified corporate portfolio. Although all branches of industry are present here, the strongest fields are the automobile, gas and chemical industries.
- The capital has a development programme approved for the period 2004 - 2006, which defines the development of the capital city in four key areas - transport, safety and order, accommodation and municipal development. In 2004 the city plans to invest SKK 1.8 bn from its budget revenues. The agency positively assesses the endeavour of the city to finance its investment objectives also from non-returnable sources of financing.
- Following clearance of financial relations to the city's budget, the economic results of the capital in 2002 ended with a surplus of SKK 625 million. The surplus was allocated to the reserve fund of the capital city and subsequently released for settlement of part of the principal of the debt service of the city in August 2003. The agency also deems positive the fact that the city has created a reserve from its own sources for the amortisation of part of the debt.
- With the arrival of the new management the system of management of the municipality was modified in order to increase the effectiveness of management processes, which the agency sees as a positive step. It does see certain reserves in the area of debt service management however. The Slovak Rating Agency recommends for the Capital City Bratislava to complete its project of financial restructuring by starting to effectively repay liabilities to the banks. The increased need for available financial resources to cover the cumulative repayments reduces the freedom to finance other priority investments of the city. The application of other long-term instruments with long-term maturity and the gradual amortisation of debt create space for utilisation of the strategic, commercial and economic potential of the city.
- The Capital City Bratislava has elaborated a concept of asset management for the city. The priorities of the new management in this area are to consolidate and increase the effectiveness of handling the city's assets, the rationalisation and distribution of work and activities related to management of the city's assets among municipality departments. A fundamental change was seen also with regard to management of the invested interests of the city. The city is creating a concept for managing stakes held by the city, which projects also with the sale of certain stakes, which is deemed positive by the agency.
- One of the goals of the city is to improve the level of communication with the public. To this end it set up an office of first contact, which offers a high standard of services to the public. This step is an important element of transparency at the level of local government, which is deemed positive by the Slovak Rating Agency.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 16 December 2003