The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Hungary: Rating taken down a notch

Fitch has cut Hungary’s sovereign credit rating to BBB+ from A–, one of the first times that a new EU member state has had a downward, rather than upward, rating movement applied to it since the EU enlargement process began.

“The downgrade of Hungary’s sovereign ratings reflects the adverse impact of persistently large budget deficits, which have increased the public and external debt burdens,” says Edward Parker, a senior director in Fitch’s sovereign ratings group.

Last year was the third in a row that budget deficits had to be revised substantially up from original targets. The target of 4.7% for 2005 was significantly breached, reaching an estimated 7.4% by the year-end.

Bond prices continued to fall in December, with news that the government is to double its net debt issuance in forint to Ft831 billion ($3.9 billion), from Ft416 billion in 2005.

Following Fitch’s announcement, investor demand was poor at both three-year and 15-year bond auctions in mid-December, which, analysts said, was lower than at previous tenders, with higher yields. And although foreign holdings of domestic debt crept higher, they were still far below highs in the first quarter of last year.

Analysts say that unless foreign investors continue to return to domestic Hungarian securities in the coming months, demand for the significantly higher level of issuance this year will remain muted.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree