1. MUNICIPAL BONDS MSE 8th Annual Conference Ohrid, March 29-31, 2007 Barbora Lazarova Bratislava Stock Exchange

2. Step by step 1. Legal Framework 2. Role of the Issuer 3. Role of the Stock Exchange Member 4. Role of the Regulator - SEC 5. Role of the CSD 6. Role of the Stock Exchange 7. Role of Rating 8. Legal Time Periods and Fees 9. Conclusions

3. 1. Legal Framework Law on Securities Law on Securities Either a separate Act on Bonds or a new Either a separate Act on Bonds or a new Chapter on Bonds in the Law on Securities Chapter on Bonds in the Law on Securities Law on Local Self- Government Law on Local Self- Government More explicit formulation of Municipal More explicit formulation of Municipal Council competency to approve the Council competency to approve the issuing of municipal bonds Act on Accounting Act on Accounting International Public Sector Accounting International Public Sector Accounting Standards (IPSAS) Standards (IPSAS)

4. 2. Role of the Issuer Creation of an Internal Team Creation of an Internal Team Selection of External Consultants Selection of External Consultants (SE member, legal and financial advisors, (SE member, legal and financial advisors, auditors, PR specialists) Due Dilligence & Internal Evaluation Due Dilligence & Internal Evaluation Decision of the Municipal Council Decision of the Municipal Council Preparation of the Terms of Issue and/or Prospectus Preparation of the Terms of Issue and/or Prospectus MSE Guidebook for Municipalities MSE Guidebook for Municipalities

5. 3. Role of the SE Member Publication of the Terms of Issue and/or Publication of the Terms of Issue and/or Prospectus Prospectus Public Offer & Subscription Public Offer & Subscription Underwriting (issuer investors) Underwriting (issuer investors) Registration of bonds in CSD Registration of bonds in CSD Admission to the Stock Exchange Admission to the Stock Exchange Repeal the provision of the Law on Securities Repeal the provision of the Law on Securities on „Mandatory Buyout of Unsold Securities“ on „Mandatory Buyout of Unsold Securities“ Successful Underwriting – even when the Entire Successful Underwriting – even when the Entire Volume has not been Subscribed Volume has not been Subscribed

6. 4. Role of the SEC Prospectus Prospectus Very little in the Law on Securities Very little in the Law on Securities To adopt European Directive 2003/71/EC To adopt European Directive 2003/71/EC on Prospectus on Prospectus Legal Time Period for the SEC Approval of Legal Time Period for the SEC Approval of the Prospectus 60 days => 10 days 60 days => 10 days Amount of Fees Amount of Fees Fees derive from the volume of the issue Fees derive from the volume of the issue => lump fee is needed => lump fee is needed

7. 5. Role of the CSD Registration of all SE traded Securities in Registration of all SE traded Securities in Book-entry form ISIN Numbering Agency ISIN Numbering Agency Pro-customer oriented Services Pro-customer oriented Services Quality & Promptness of Services Quality & Promptness of Services Amount of Fees Amount of Fees Transparency of the Fee Structure Transparency of the Fee Structure (Access Fee, Entry Fee, Execution Fee, (Access Fee, Entry Fee, Execution Fee, Keeping Records Fee) Keeping Records Fee)

8. 6. Role of the Stock Exchange Listing Requirements Listing Requirements Number of Bond Holders 50 => 10 Number of Bond Holders 50 => 10 Liquidity Underwriting Liquidity Underwriting Listing Rules – Chapter 2.04, point 2 Listing Rules – Chapter 2.04, point 2 Municipal Bonds should be listed on Municipal Bonds should be listed on the MSE Official Market the MSE Official Market Assistance of the Listing Sponsor: Assistance of the Listing Sponsor: => more safety for investors => more safety for investors => more promotion for the issuer => more promotion for the issuer

9. 7. Role of Rating Rating of Municipalities is not a Mandatory Rating of Municipalities is not a Mandatory Listing Requirement Listing Requirement After Approximation with the EU After Approximation with the EU Legislation (no Mandatory Prospectus) is highly recommended to add as a Listing highly recommended to add as a Listing Requirement Requirement Rating brings lasting Transparency and Rating brings lasting Transparency and Trust for Investors Trust for Investors

10. 8. Time Periods and Fees Competitivness to Bank Credits in Time and Costs Competitivness to Bank Credits in Time and Costs Minimize Time Periods of SEC for Approval of Prospectus, CSD for Registration and Stock Exchange for Admission of the Issue Minimize Time Periods of SEC for Approval of Prospectus, CSD for Registration and Stock Exchange for Admission of the Issue Decrease the amount of related fees, with special focus on SE Member Fees for Subscription, Underwriting and Placement Decrease the amount of related fees, with special focus on SE Member Fees for Subscription, Underwriting and Placement

11. 9. Conclusions Attractivity of Municipal Bonds Attractivity of Municipal Bonds Transparency of Municipalities Transparency of Municipalities Amendments of Laws + IPSAS Amendments of Laws + IPSAS Adjustments of Listing Rules Adjustments of Listing Rules Guidebook for Municipalities Guidebook for Municipalities Legal Time Periods and Fees Legal Time Periods and Fees Willingness and Support of State Willingness and Support of State and all Market Participants and all Market Participants

12. CONTACTS Barbora Lazarova Deputy Director General Bratislava Stock Exchange Tel: +4212 4923 6161 E-mail: lazarova@bsse.sk lazarova@bsse.sk www.bsse.sk