The rating on the City of Milan reflects the city's currently very strong cash holdings coupled with our expectation that liquidity will remain adequate during the next few years. We deem that these two factors, combined with a powerful economy, offset to some extent Milan's weak budgetary performance and growing debt burden. Our assessment of Milan's liquidity position is very positive (see "Liquidity" section below). There is no significant shortfall between operating revenues accrued and collected, the main public companies show good liquidity levels, and cash holdings are currently very large, at around 50% of 2010 estimated operating expenditure. Although much of these cash reserves is linked to specific investments, we understand that the city has leeway to carry out
