I. RATING REPORT

The Slovak Rating AgencyTM hereby confirms the domestic crown rating for the City of Trnava and upgrades the foreign currency rating as follows:

Long-term crown rating	A- (stable outlook)
Long-term FX rating	BBB+ (stable outlook)
Short-term rating	S2+

The assigned long-term rating in the category of transactions in domestic crowns of A- (stable outlook) is on the same level as the rating of the State. In the category of foreign currency transactions the City of Trnava was assigned the rating of BBB + (stable outlook), which also corresponds to the level of risk of the Slovak Republic. The short-term rating of the City of Trnava is S2+, which is the best possible short-term rating for an entity with a long-term rating of A-.

Justification:

• Development of the city in the most recent period went ahead in line with the Strategic Plan of Economic Development of the City of Trnava, which defined the basis requirements of the city. Implemented projects in 2003 include the establishment and operation of a new Information Centre for small and medium-sized businesses, the elaboration of a database of land lots and buildings suitable for business purposes, the creation of an office of first contact, and the creation of conditions for the development of sport and cultural activities.
  
  
• In 2003 the investment construction project was started on the car plant of PSA Peugeot Citroen in the territory of the city. The arrival of the investor meant the inclusion of additional priorities in the strategic plan of the city however. The city is reacting to these requirements in an operative manner, with an updated land plan and other strategic documents being at the stage of elaboration. The following were included to the set of new priorities of the city - resolution of housing issues, the transport situation, and the construction of a technological centre and business incubator. Thanks to the construction of the plant of PSA Peugeot Citroen, the potential of the city has increased, as it will now start to play a more important role in the region in terms of employment, and cultural and social activities, which in turn will mean increased demands on local administration however.
  
  
• The financial situation of the city is favourable over the long term, with the economic results of the city producing a surplus in 2003 of SKK 23,301,000 while the debt indicator reached a stable favourable value. At the present time the city adheres to the criteria of the new budgetary rules valid as of 1.1.2005 - to the end of 2003 the ratio of debt service to current income was 5.07% (the maximum value prescribed by law is 25%) while debt to current income to the end of 2003 reached the value of 35.62% (the maximum value prescribed by law is 60 %). Positive economic results are also reported by subsidised organisations of the city, which in 2003 ended their activities with a positive balance of SKK 9,717,000.
  
  
• Despite the fact that the city utilises all available legal means to enforce its receivables, the adverse structure of receivables in terms of time prevails. Overdue receivables to the end of 2003 comprised as much as 94.5% of the total volume of receivables, taking their volume at the end of the year to SKK 118,154,000. Receivables are to a large extent registered against debtors in bankruptcy and were inherited from the past. The high level of solvency of the city to settle its liabilities on time and in full is not affected however.

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