I. STATEMENT ON RATING
Slovenská ratingová agentúraTM (Slovak Rating Agency) enhanced the rating of the City of Piešťany to:
| Long-term crown rating | BB + (stable outlook)
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| Long-term foreign exchange rating | BB (stable outlook)
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| Short-term rating | S3
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The long-term rating assigned to the City of Piešťany is BB+ (stable outlook) in the category of transactions conducted in Slovak crowns. The rating of a state in the category of Slovak crown transactions is A – stable outlook. In the category of transactions conducted in foreign currencies the City of Piešťany was assigned the rating BB (stable outlook). The short-term rating of the City of Piešťany is S3, which is the best-possible short-termed rating of subjects that had been awarded a long-term rating of BB.
Substantiation:
- The city of Piešťany is presently in the preparation stage of its strategic plan until 2015, the definite version of which will be elaborated, after commenting by citizens of the municipality, until the end of September 2004. The strategic plan will represent the point of origin also in the preparation of the 2005 plan and budget of the city. The Agency positively evaluated the essential orientation of the municipal development (development of travel), which the investing priorities in the recent election period would be subsequently subordinated to.
- The city shows stable development of its financial situation. It reported 7 716 000 SKK surplus of its economic management at year-end 2003, representing a 2.12 % ratio in the 2003 revenues. Loan indebtedness of the city is currently acceptable, but the Agency recommends to the city, considering the potential future financial impact of litigations, to manage its loan indebtedness with regard to its realistic possibilities of paying off any liabilities arising from litigations.
- The implementation, by a law office, of repeated execution due to the city´s default on payment of SKK 17 million in commission on legal fees remains a realistic threat in the field of litigations. The Agency positively evaluated the fact that, in link with this case, the city succeeded in achieving cancellation of the execution proceedings against the city.
- Management of trading companies with ownership interest of the city shows a certain amount of improvement. The Agency evaluated positively that the municipal office introduced and implemented systemic steps with regard to these companies, in particular to the company wherein the city simultaneously acted in creditor position.
- The Agency considers the current position of receivables still to be high, although the majority of them had arisen in the past. However, intense enforcement is still inevitable.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 29 June 2004