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Positive Outlook: Fitch Ratings Likely To Upgrade Hungary's Credit Rating

Tamás Székely 2015.11.04.

Hungary’s “BB+” sovereign credit rating is a single notch below investment grade and its outlook is positive and it is likely to be upgraded to investment category, Fitch Ratings said. Ever since Hungary was downgraded to speculative grade in January 2012, its credit profile has improved considerably, consistent with the current positive outlook. The New York- and London-based credit rating agency is scheduled to review Hungary on Friday.

Reports suggest that Hungary, Portugal and Macedonia are those countries, Fitch is more likely to upgrade than keep it stable or cut it. General government balances are forecast to be in line with “BBB” medians for 2015, but debt levels are much higher. Against the high level of public indebtedness, however, are strong current account positions – albeit with higher net external debt burdens – and high governance scores, the agency said. Hungary has been on positive outlook since May 2015 with Fitch, the only major ratings agency to have assigned a positive outlook on Hungary’s sovereign rating. According to precedents, it takes about 6 years for a country with “speculative grade” to regain position in  “investment category”.

Moody’s and Standard & Poor’s maintain Hungary’s ratings with stable outlook. Moody’s is scheduled to review Hungary on Friday. Analysts do not expect Moody’s to upgrade Hungary’s credit rating back to investment grade, but it is likely to raise the outlook to positive from stable, said referring to Eszter Gárgyán, chief analyst at Citigroup in Budapest. As for Standard & Poor’s, it has already concluded the scheduled reviews of Hungary’s ratings for this year.

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