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.
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