I. RATING REPORT

Slovak Rating Agency upgrades the rating of the Town of Nové Zámky as follows:

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

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

Justification:

• Regarding the creation of strategic documents the agency can state a definite improvement. The Town of Nové Zámky is currently applying to the grant scheme for the project of compiling the basic strategic document of long-term development of the town, which it is necessary to elaborate chiefly due to the absence of strategic documents in the past for the purposes of local government and institutions in the town. The agency recommends continuing with activities related to the preparation and elaboration of the strategic document intensively, also so that requirements as per applicable legislation are satisfied.
  
  
• In the area of finances, a significant improvement has been recorded compared with the preceding periods. With the aim of boosting the current income of the town in 2004 (a y/y growth of SKK 19.8 million) the rates of property taxes were increased, which positively reflected on the volume of tax revenues, these increasing by SKK 15 million over 2003 to reach the value of SKK 153.6 million. Increased income for the current budget also had a favourable impact on the settlement of obligations of the town. While at the end of 2003 the town recorded liabilities up to 60 days in arrears comprising SKK 286,000, to the end of 2004 the total volume of liabilities were still pending. The agency can state that the town settles its liabilities smoothly and at present does not register any overdue liabilities.
  
  
• Thanks to the favourable development of current income and the sale of part of the interest held by the town, an economic surplus was posted for 2004 amounting to SKK 20.9 million (5% share of total income of the town), which is a fundamental improvement over 2003 (growth of SKK 18.5 million). The posted surplus for 2004 has generated the prerequisites for implementing future investment objectives of the town, which the agency deems positive. At the same time, however, the agency recommends allocating a certain part of the surplus and creating financial reserves also in relation to the new system of financing in local self-government from 2005.
  
  
• While in 2004 a certain decline was seen in the area of investments due to consolidation of municipal finances, the year 2005 will represent a year of substantial investment development for the town. In 2005 the town anticipates carrying out development programmes worth a total of SKK 102 million, of which almost 45% should be financed from non-recourse sources of financing, which the agency regards as positive.

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

Slovak Rating Agency
Bratislava, 22 Februar 2005