I. STATEMENT ON RATING
The Slovak Rating Agency confirms Nitra town's rating as follows:
| Long-term koruna rating | A - (stable outlook)
|
| Long-term foreign currency rating | BBB (stable outlook)
|
| Short-term rating | S2
|
The long term rating A- (stable outlook) was assigned to Nitra town in the category of transactions in Slovak koruna, which the rating at the same level of the state. In the category of transactions in foreign currencies the town Nitra was assigned the rating BBB (stable outlook), which is also at the same level of the state. The short term rating assigned for Nitra town is S2, which is the best possible short term rating for subjects achieving a long-term rating of A-.
Reasoning:
- In the strategic sphere a strong aspect of the town remains its strategic planning. The town is preparing to draw up a plan of strategic economic development, which will be processed in co-operation with the consultancy company Bergman Group and Academia Istropolitana NOVA. This document, of such comprehensive strategic significance, will be processed with the participation of the business, municipal and tertiary sectors. The town is currently applying for a grant in the amount of SKK 2 million. For processing this strategic document. In the case that the town is not successful in gaining the grant, the expenses for this project will be covered from own resources, which the agency perceives as a positive factor.
- The town's financial situation continues to remain stable, which is a result of quality financial management at the municipal level. The town's finances at the end of 2002 were in considerable surplus (of SKK 129 million), which the agency perceives positively, since the town is creating reserves for unforeseen events and the realisation of developmental investment activities in future periods. In the field of delimited competences the agency evaluates positively the town's efforts to rationalise the network of school facilities and create an emergency fund, which will be the source of financing for hidden debts of assets taken over.
- The town in the coming period will realise the project "Expansion of the waste water treatment plant for Nitra" in the amount of €13 million, which will be financed from funds from ISPA, the Ministry of the Environment of the SR and from credit sources that the town will draw on. Even despite the fact that in the coming period due to the drawing of loans for the mention project the town's level of debt will increase, the Slovak rating agency does not perceive any risk due any potential loss of solvency on the part of the town, but recommends that the level of loan debt is not increased by loans on a commercial basis in future periods. The agency does however consider the low diversification in the number of financing creditors as a risk factor.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 25 November 2003