Moody’s leaves Hungary in 'junk'

By bne IntelliNews July 11, 2016

Moody’s Investors Services confirmed Hungary’s sovereign rating at “Ba1” - one notch below investment grade - during a scheduled review on July 8. 

Moody’s had sent some positive signs recently that it could join Fitch to offer the country a second investment grade. Last month, the agency raised its outlook on the country’s banking sector to positive. However, many noted Moody's was unlikely to hand Hungary an escape from around five years in junk in the immediate wake of Brexit. It is thought likely, however, that an upgrade will follow in November.

Fitch upgraded Hungary to investment grade on May 22. However, the sovereign needs two IG ratings to attract many of the largest institutional investors. Standard & Poor's suggested earlier this month it is unlikely to offer an upgrade during its next scheduled review in September.

Moody’s changed its outlook on Hungary’s rating to positive in November, but left Budapest on tenterhooks in March. Similarly, the rating agency did not issue any statement about the reasons for leaving Hungary’s credit ratings unchanged on July 8.

Hungary’s Ministry of Economy, as well as many analysts, assume that Brexit and resulting uncertainty on the markets have 'postponed' an upgrade. The market expects Moody’s will offer an upgrade at its next scheduled review of the rating on November 4, should Hungary’s GDP growth stabilize in the coming months after disappointing Q1 results.

The Hungarian government has insisted for some time that the country's macroeconomic fundamentals deserve an investment grade, noting that the economy's external vulnerability has been slashed.

Related Articles

Ukraine places $3bn in 15-year Eurobonds at 7.375%

Ukraine has placed $3bn in 15-year Eurobonds at 7.375% per annum, Ukrainian President Petro Poroshenko said during a meeting with international investors in New York on September 18. "Ukraine has ... more

Iran introduces its own rating system for banks

Governor of the Central Bank of Iran (CBI) Valiollah Seif has announced that his institution is to launch a national rating system for banks, Iran Labour News Agency reported on September 17. ... more

October local elections to test Macedonia's fragile political stability, IMF warns

The International Monetary Fund (IMF) said on September 18 it expects the Macedonian economy to slow down to moderate growth of 1.9% in 2017 due to the prolonged political uncertainty. The fund ... more

Dismiss