Statement on rating

Slovenská ratingová agentúra (the Slovak Rating Agency) has assigned the following rating to the City of Trnava:

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

The assigned rating in the category of transactions in Slovak korunas, BBB+, stable outlook, corresponds with the country rating level of BBB+, positive outlook. In the category of foreign currency transactions the City of Trnava also received BB+ rating, stable outlook on the risk level of the Slovak Republic: BB+, positive outlook. Short-term rating for the City of Trnava is S2+, which is the best possible short-term rating for entities achieving long-term rating of BBB+.

Rationale

• The strength of Trnava continues to be the high level financial management and the clear concept in all areas of the local management. The city has elaborated a detailed management analysis for the period of past ten years in electronic form, which contributes to increase in management quality and seeking for reserves in the management. City shows surplus in the local management as of the end of the current year, which are the sources of financing of various activities providing future development of the city. Electronic form of accounting system considering the city management since the beginning of the self-administration existence provides a complex view on city management.
• We evaluate positively the total liquidity of Trnava. The volume of available funds of the city reached the amount of SKK 71 398 thousand as of ultimo of 2001, which represented nearly 38 % of current assets of the city. Debt service reached the volume of SKK 63 091 thousand as of ultimo of 2001, whereby the city paid off the bonds in the volume of SKK 40 million before maturity. The final result of the issue management is the absolute saving of funds in the amount of SKK 27,58 million. The volume of revenues of Trnava continues to show an ascending development trend and the structure of budgeted revenues is diversified. We appreciate the increasing share of grants in total revenues of the city showing the success of the city in acquiring them. According to new budget regulations, the debt-service-to-current-revenues ratio should represent 8,83 % in 2002, which means that at present the city will keep the principle of covering of current expenditures by current revenues.
• Within the scope of public administration reform, the city is prepared to assume the delegated competences and solves the transition of some competences of government administration authorities to the municipalities and VÚC. New organisational structure has been approved by the municipal authorities after performing of internal audit in April, which comes up to reform requirements. The city insists on various marketing activities making the city and the region well known. By addressing new investors and acquiring of new unrecoverable sources of financing, the city is seeking for new employment opportunities, and so for increase of living standard in the city.

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

Slovak Rating Agency
Bratislava, 9 July 2002