I. RATING REPORT
The Slovak Rating AgencyTM hereby confirms the rating for domestic crowns for the Town of Levice and upgrades the rating for foreign currency transactions as follows:
| Long-term domestic crown rating | BBB (stable outlook)
|
| Long-term FX rating | BB+ (stable outlook)
|
| Short-term rating | S2
|
The assigned long-term rating of BBB (stable outlook) in the category of transactions in Slovak crowns is 2 points lower than the rating of the State. In the category of FX transactions, the Town of Levice was assigned the rating of BB+ (stable outlook). The short-term rating of the Town of Levice is S2, which is the best possible short-term rating for entities with a long-term rating of BBB.
Justification:
- With regard to strategic documents of the town, over the most recent period no major changes were made. The strategic goal of the town is set out in the Town Development Programme for the period 2003-2006, which resolves the strategic tasks of the town with regard to the natural environment, education, social spheres, housing, sport and culture, communication with citizens and so on. The Slovak Rating Agency does however appreciate the interest of the town in co-operating with the Nitra upper tier regional unit in carrying out investment projects leading to the development of business in both the town and in the region (the creation of a business incubator). The town is interested in elaborating a Strategic Development Plan for the town. Financial backing for the project is projected to come from regional development grant schemes from the PHARE fund.
- One of the strategic goals of the town's development continues to be the creation of the industrial estate Levice - Géòa, which will bring new job opportunities to the town and the surrounding area. At the present time the town has already concluded positive talks with two investors and is holding discussions with other potential investors. The projected start of construction work on the industrial estate is set for the autumn of 2004.
- The agency assesses the financial results of the town as stable. In 2003 the town ended with a surplus of SKK 9,295,000 and the debt of the town once more reached a secure level, with the indicator of debt to income as of 31.12.2003 coming to 15.98%. The town already adheres to the criteria pursuant to the new budgetary rules set to be introduced from 1.1.2005 - the ratio of debt service to current income is 4.35% (the maximum prescribed value is 25 %) and debt to current income to the end of 2003 reached the level of 29.92% (the maximum prescribed value is 60 %). The agency positively regards the restructuring of existing loans in 2003, by which the town procured more advantageous terms of financing and saved on expenses.
- Certain reserves are seen by the Slovak Rating Agency in the management of subsidised organisations of the town. We therefore recommend improving the monitoring process and to ensure such also by way of specialised sections of the Town Hall.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 27 July 2004