I. RATING REPORT

Slovak Rating Agency assigns the County City of Trenčín the following rating:

Long-term domestic koruna rating	BBB+ (stable outlook)
Long-term foreign currency rating	BBB (stable outlook)
Short-term rating	S2

The County City of Trenčín was assigned the long-term rating of BBB+ (stable outlook) for transactions in Slovak koruna, which is 1 level under the risk level of the State. Regarding transactions in foreign currencies, Trenčín was assigned the rating of BBB (stable outlook). The short-term rating of Trenčín is S2, which is the best possible short-term rating for an entity with a long-term rating of BBB+.

Justification:

• The County City of Trenčín had a population of 57,271 to the end of 2004, making it the ninth largest city in Slovakia. It the centre of the clothing and textile industry, which has a rich tradition in the city. It is also the cultural centre of the region, with exhibition areas and international fashion trade fairs. There are two universities established in the city, which provide the foundation for the city to become the centre of university education in the Považie region. Thanks to its good transport location, a well developed system of road and rail transport, and diversified industry, the city has excellent requisites for further development and the settlement of foreign investors.
  
  
• The city has prepared a key strategic document - the Economic and Social Development Plan, which resolves the development of individual areas of the city across the board. Development priorities of the city in the near future include support for business, improving the quality of provided public services and development of infrastructure. One investment priority in 2005 is the start of work on the construction of an industrial park, which should see a concentration of branches with higher added value.
  
  
• The financial management of the city is stable over the long term. In the period 2001-2004 the city ended with an economic surplus, which to the end of 2004 comprised SKK 49.8 million. The agency regards the restructuring of bank loans and municipal obligations in 2004 as positive, as it led to financial savings for the city from title of favourable development of the exchange rate of the Slovak koruna against the EUR, as well as savings on interest expenses. Even though to the end of 2004 the gearing of the city according to the new budgetary rules was 28%, the agency feels that the city should maintain a prudent approach concerning any increase in indebtedness, and should proceed to draw loans while concurrently increasing current income.
  
  
• The system of internal management, including regulations, is well maintained under the conditions of City Hall. This year a project of process management is being applied in the city, which is aimed primarily at making processes more economical and at reducing the number of management levels. The agency recommends continuing with this process in a way that quality system elements are preserved.

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

Slovak Rating Agency
Bratislava, 5 April 2005