RATING REPORT

The Slovak Rating AgencyTM hereby upgrades the rating of the Town of Malacky as follows:

Long-term domestic currency rating	BB+ (positive outlook)
Long-term foreign currency rating	BB (stable outlook)
Short-term rating	S3

The Town of Malacky is assigned the long-term rating of BB+ (positive outlook) for the category of transactions in Slovak koruna. The rating of the state in the category of Slovak koruna transactions is A- (stable outlook).In the category of transactions in foreign currencies the Town of Malacky is assigned the rating of BB (stable outlook). The short-term rating of the Town of Malacky is S3, which is the best possible short-term rating for entities with a long-term rating of BB+.

Justification:

• The Town of Malacky continues to create suitable investment opportunities and so also conditions for support and development of job opportunities and an increase in the purchasing power of the local population. One of the projects supporting the development of business and employment in the town and the Zahorie region as a whole is the Malacky Incubator, which will be in operation in October 2004. It is classed as the largest business incubator in Slovakia. Another project in preparation in this area concerns Malacky Industrial Park, which several investors have already expressed an interest in. The Town also uses the potential arising from the already created industrial parks in the vicinity and from the proximity of the Slovak capital city Bratislava.
  
  
• The financial management of the town is stabilised compared with the previous period. The gearing of the town attains favourable values at present. In relation to the drawing of new loans on a commercial basis, which the town projects with by the end of 2004, we recommend diversifying the bank creditors.
  
  
• Compared with the preceding period, changes occurred in terms of the management of the trading companies where the town holds an interest, with the adoption of measures aimed at increasing the quality of services provided by the town and also at saving costs.
  
  
• In the interest of satisfying its role in the public interest, the town secured the completion of a basic school as one of the transferred competences taken over from state administration. The agency perceives a certain risk in terms of securing the financing of the school as only part of the investment was financed by way of decentralised subsidies, with the remaining SKK 75 million coming from temporary financing of the building contractor, although covering the investment from the state budget is currently being resolved.

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

Slovak Rating Agency
Bratislava, 28 September 2004