Moody's cuts Slovakia cities

Moody's Investors Service said it downgraded the national-scale rating of the City of Presov to Aa2.sk from Aa1.sk with a stable outlook. The national-scale rating of the City of Myjava was downgraded to Aa3.sk from Aa2.sk and its outlook was changed to negative from stable. Moody's said it said it also changed the outlooks to negative from stable for the Aa2.sk rating assigned to the City of Kosice and on the A3/Aa1.sk ratings on the region of Kosice.

The downgrades were prompted by the budgetary pressures stemming from the recessionary economic environment in Slovakia and growing debt exposure, Moody's said it said it said.

Slovak regional and local administrations have faced a material decline in tax revenue, particularly in personal income tax, the agency said.

Moody's also said it believes that, in some cases, the inability or unwillingness to adjust capital expenditures will trigger wider overall budgetary deficits and higher debt exposures in 2009.

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