Moody's cuts Kosice

Moody's Investors Service said it downgraded the region of Kosice's rating to Baa1 from A3 and its national scale rating to Aa2.sk from Aa1.sk.

The outlook has been changed to stable from negative.

The downgrade reflects the deterioration in the region's financial profile over the past few years, which is now more in line with the Baa1 rating.

The region's budgetary position has been under pressure since 2009 as the unprecedented sector-wide shortfall in the region's personal income tax revenue started to materialize, Moody's said.

Given the size of the shortfall and rigidity in the operating expenditure, the region's gross operating balance is expected to drop to nil in 2010, the agency said.

It is unlikely to fully recover in medium term due to the need to ease the grip on already squeezed expenditure levels, Moody's added.

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