I. RATING REPORT

The Slovak Rating Agency hereby confirms the rating in Slovak koruna for the Town of Humenné and upgrades the rating in foreign currencies as follows:

Long-term domestic koruna	BBB (positive outlook)
Long-term foreign currency rating	BBB- (positive outlook)
Short-term rating	S2

The assigned long-term rating of BBB (positive outlook) in the category of transactions in Slovak koruna is 2 points lower than the rating assigned to the State (A- stable outlook). In the category of foreign currency transactions the Town of Humenné was assigned the rating of BBB- (positive outlook). The short-term rating of the town is S2, which is the bet possible short-term rating for entities with a long-term rating of BBB.

Justification:

• The agency positively perceives the efforts of the town to further improve the business environment in the town and to develop new job opportunities. Proof of this can be seen also in the creation and opening of the Industrial Estate at Guttmanovo on 18.11.2004 as one of the key strategic development investments of the town. The start of production of one of the investors is projected for the end of March 2005.
  
  
• The financial situation of the town has been favourable over the long-term, with the economics of the town ending 2003 with a surplus of SKK 34,749,000, which represents almost an 8% share of all revenues in 2003. The volume of available sources comprising SKK 49,897,000 to the end of 2003 was sufficient to cover short-term liabilities of the town, which were covered almost five times over by the available sources. The payment discipline of the town is good, with it repaying a loan during 2004 that was drawn under commercial terms and it already has the potential generated for settlement of further loans drawn in connection with the planned implementation of the development objectives of the town.
  
  
• Control mechanisms of the town are on an adequate level in our opinion, which is documented by the checks that are carried out. The activities of the chief inspector not only focus on inspection of processes in the Town Hall, but also inspections in organisations in which the town acts as administrator or organisations securing activities of the town on the basis of mandate agreements. The results of inspections are used to create and adopt measures, the implementation of which is then progressively monitored, which in the end contributes also to improving the work and processes in the controlled entities. The agency recommends continuing with the use of the control system applied to date.

Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.

Slovak Rating Agency
Bratislava, 14 December 2004