S&P reviewed its sovereign credit ratings on Hungary, thereby lifting it back to investment grade
Standard and Poor’s raised its long- and short-term foreign and local currency sovereign credit ratings on Hungary from BB+/B to BBB-/A-3. The rating agency also upgraded its ratings on the Central Bank of Hungary from BB+ to BBB-, while the outlook on both Hungary and the Central Bank is stable. With this upgrade Hungary was lifted back to investment grade.
S&P explained its decision as follows:
- Hungary’s fiscal, external and GDP outcomes have improved significantly since 2008;
- Hungary has not had a current account deficit since 2009;
- S&P expects Hungary’s economy to grow at an average rate of 2.5% a year in 2016-2019;
- Hungary has reduced the proportion of foreign currency debt within central government liabilities, while non-resident holdings in forint denominated government securities also have decreased;
- S&P anticipates an increase in the contribution of tax-rich domestic demand to overall GDP growth, positively impacting government finances.
Currently, out of the three key credit rating agencies the country is junk grade only at Moody’s. At Moody’s, however, a rating review for Hungary is scheduled for 4 November. If this results in another upgrade, the country will return to investment grade at all three agencies again after five years.
Gabriella Kopházi-Tóth
Senior Relationship Manager
GSS Hungary