Moody's rates Krompachy Aa2.sk

Moody's Investors Service said it assigned a long-term national scale rating of Aa2.sk with a stable outlook to the Slovakian City of Krompachy.

The agency said the rating is based predominantly on recent improvement in the city's operating and financial performances and its decreasing debt. The city posted positive operating margins last year for the first time since 2001. To a large extent, improved budgetary performance was caused by the positive impact of the recent reforms to the financial framework governing Slovak municipalities, Moody's said, adding that the positive trend is also apparent as the city saw some strengthening in its self-funding capacity for infrastructure projects.

However, Moody's noted that the city is not without financial challenges, including its exposure to significant contingent liabilities and large infrastructure needs with still a modest self-funding capacity and limitations on its ability to take on new debt. Also, despite the recent increase in its revenue base and greater spending autonomy, the city remains exposed to an institutional framework that is immature and subject to potential changes that could alter budgetary performance, revenue flexibility and rigidity of its spending base, the agency said.

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