I. STATEMENT ON RATING

Slovak rating agency granted new municipal rating to Partizánske (City of)

Long-term local currency rating    BBB (stable outlook)
Long-term foreign currency rating    BB    (stable outlook)
Short-term rating    S2

The granted long-term rating in the category of transactions in Slovak crowns BBB (stable outlook) is two degrees below the rating of the Slovak Republic (A - stable outlook). In the category of transactions in foreign currencies rating BB (stable outlook) has been granted to City Partizánske, which is two degrees below the risk level of the Slovak Republic. Short-term rating of City Partizánske is S2, which is the best possible short-term rating for the entities attaining long-term rating BBB.

Rationale:

From the political and administrative point of view, City Partizánske is the seat of the district Partizánske associating 23 municipalities that ranks it among the smaller districts within the Slovak republic. With the population of 24 907 inhabitants as of May 26, 2001 the city Partizánske ranks to smaller cities. Partizánske was historically bound up with the name "Baťa", who was the main representative of both leather and shoemaking industry in Slovakia. At the present, the city is still keeping this industrial tradition, because the companies operating in the city and in the region are dealing particularly with shoe production and are the most important employers. Enterprises within the city are represented mainly by Slovak capital. The city has unemployment rate of 15,5 %, which is equivalent to the unemployment rate of the district Partizánske (15,85 % as of ultimo of 2002), while the district Partizánske is the district with higher unemployment rate among all districts in region of Trenčín. As of ultimo of 2002, the unemployment rate of region Trenčín achieved the value of 10,91 %, which is significantly lower than the national unemployment rate reaching 17,45 % as of ultimo of 2002.
City has well developed of internal regulations and standards governing the primary functions of the city. The city has strictly defined competences in disposal with the property referring to the city and organisation depending on its budget as well as to business companies with majority share of the city. Cooperation and communication of the city with the municipal corporation are satisfactory, which is result of effective operation of municipal corporation and city council commissions. In order to unify and improve the activities of municipal corporation commissions the Mayor passed Principles of municipal corporation commission activities valid for the actual election period.
Management of property participation of the city is satisfactory. Management and control mechanisms in business companies with property participation of the city are provided by participation of municipal corporation deputies, or statutory bodies in general meetings and supervisory boards. However, we see the risk in non-fulfilment of duties of some business companies in relation to the city, having negative impacts on city economy in the past. In our opinion, the city should proceed to provision of loans and assistance to companies with majority share of the city more carefully, because in case of negative results the city is confronted with risk resulting from settlement of loss realised in business company as well as with risk resulting from non-settlement of loans provided by the city. However, we evaluate positively management of non-financial institutions established by the city, where the economy results are monitored and analysed at various internal and external management levels.
Realised economy results of the city within monitored periods are influenced by fluctuations, resulting mainly from unstable development of actually realised revenues in comparison with expenditure development. Grants and transfers as irrecoverable and appropriate financing resource are in very low degree in budgeted revenues structure. The volume of available funds of the city reached the amount of SKK 53,8 million as of ultimo of 2002, which means the short-term liabilities as well as debt service of the city have been covered 2 times. Surplus of the city in the volume of SKK 28,8 million as of ultimo of 2002 will be the resource for realisation of strategic plans of the city in coming time period. Indebtedness as well as debt service indicators have been positive within the monitored period. At the present, the city is meeting criteria according to new budget regulations valid as of January 1, 2005 - the debt-service-to-current-revenue ratio achieved the value of 7,93 % (according to the legislation, maximum value represents 25 %) and the indebtedness-to-current-revenues indicator reached the value of 16,77 % (according to the legislation, maximum value represents 60 %).
We see some opportunities in the area of marketing and advertising in relation to the external environment, which could be helpful in acquisition of new investors as well as in applying for funds in form of grants and allocations. We hold the view closer and deeper cooperation of the city with the business sphere will bring results in form of common projects contributing to living conditions of city inhabitants.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.

Slovak Rating Agency
Bratislava, 27 May 2003

Long-term local currency rating	BBB (stable outlook)
Long-term foreign currency rating	BB (stable outlook)
Short-term rating	S2