Moody's rates Malacky 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 Malacky.

The agency said the rating is based on the city's positive operating performances, good cash position and a manageable level of debt. Positive operating balances combined with significant capital revenue provided the city with a comfortable level of self-funding capacity between 2001 and 2005. Capital expenditures have also been supported through success in attracting project funding from central government and the European Union.

Compared to the Slovak peer group Malacky's total debt has been slightly above average, but Moody's said its debt service is about half its peer because of a different maturity structure. As the city is not planning to take on any new debt, the agency predicted that debt service costs should remain manageable going forward.

Although improvements in revenue structure have given the city greater autonomy, the local government financial framework in Slovak Republic remains a constraining factor for the rating, according to Moody's. The main negative features are the immaturity of the system, low revenue flexibility as the vast majority of revenues are still determined by central government and rigidity of current expenditure.

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