Fitch upgrades Hungary
May 24th, 2016As Hungary regains its investment grade status from Fitch Ratings after four years in the junk category, commentators are divided over what comes next.
Fitch was the last of the three big rating companies to downgrade Hungary’s sovereign debt below investment level in early 2012 and is the first to upgrade it. BBB is a far shot from the A level ratings, but it means that Fitch recommends Hungarian government bonds to investors, as they find modest budget deficits and decreasing debt ratios sustainable.
In Népszava, András Törő remarks that big institutional investors require investment grade ratings from at least two of the “big three” to start buying Hungarian government bonds, and the next “verdict” is expected from Moody’s on July 8th. He adds that Fitch didn’t object to increasing poverty which was a heavy price to pay for more balanced public finances, while “the government couldn’t care less”.
In Magyar Idők Bálint Deák agrees that Hungary still needs at least one more rating company to upgrade it, before celebrating its investment grade status, but notes that markets have already recognised the progress made by the Hungarian economy, since short term government bonds sell at an interest rate of 1 per cent.
In Magyar Hírlap, Csaba Szajlai comments that ‘our left-wing and liberal expert friends’ are running out of arguments, as Hungary’s rating now equals that of Slovenia. He believes that the remaining two rating agencies will soon follow suit.
Tags: budget, credit-rating