Moody’s raises Hungary’s outlook but retains junk rating

By bne IntelliNews November 9, 2015

Hungary was disappointed yet again as Moody’s Investors Services once again refrained from offering an escape from junk in a scheduled report on November 6. However, the rating agency did hand the country an encouraging sign, raising its outlook on the sovereign.

Moody’s maintained Hungary’s government bond rating at Ba1, the highest non-investment grade. However, improved outlook - based on the country's "declining debt and improved economic outlook" - means Moody’s is more likely to upgrade Hungary to investment grade in the future than not.

The country lost its investment grade at the three major credit rating agencies in 2011 and 2012, as long-winded talks with the IMF on a bailout broke down. The government has spent the time since arguing an escape from junk is due, and has pushed those claims harder over the past couple of years citing stronger than expected growth and falling state debt.

Moody’s said the key drivers for the outlook change are expectations that the state debt will continue its downward trend in the coming years, supported by a strong commitment to limit the budget deficit and maintain primary surpluses.

The government's "proven track record to deliver on this commitment," is notable, the agency added. Moreover, the declining share of foreign-currency liabilities in the government's debt stock renders it less susceptible to exchange rate shocks than in the past.

The ratings agency expects state debt to fall to 74.3% of GDP this year, and further to below 73% in 2016, from a peak of 81% in 2011. Hungary’s recent positive economic growth performance is also having a positive effect on the rating, and Moody’s expects GDP growth rates to be sustained in the coming years at 2%-2.5%.

A further reduction in the public debt ratio and greater policy stability could lead to an upgrade, Moody’s suggests.

 

Related Articles

Ukraine's central bank cuts key policy rate to 12.5%

The National Bank of Ukraine (NBU) will cut its key policy rate by 0.5 percentage points to 12.5% per annum from May 26. The move is consistent with the pursuit of inflation ... more

World Bank forecasts a 0.4% y/y decline in Belarus's GDP for 2017

The Belarusian economy will decline by 0.4% year-on-year in 2017, followed by a modest growth of 0.7% in 2018 and 1.2% in 2019, the World Bank forecasts in its Belarus Economic Update published on ... more

EIB and Belarus sign Framework Cooperation Agreement

The European Investment Bank (EIB) and Belarus inked the Framework Agreement on Cooperation on May 15, which paves the way for the lender to invest up to €200mn in Belarusian projects, the Foreign ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss