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Moody’s notes Budapest’s ’sound operating performance’

Moodyʼs Investors Service has completed a periodic review of its rating of the city of Budapest, lauding the Hungarian capitalʼs "continued sound operating performance," while noting potential burdens, says a press release sent to the Budapest Business Journal.

Moodyʼs says that the operating performance, reflected in the cityʼs Baa3 rating, is mostly driven by tax revenues, as well as the capitalʼs strong liquidity position and status as the hub of the Hungarian economy.

On the other hand, the agency notes the projected increase of Budapestʼs debt burden, while acknowledging that growth will start from a low level. Also, Budapestʼs rating considers the cityʼs "ambitious capital spending plan" and its public transportation provider as potential sources of pressure.

Even so, with respect to the capital, Moodyʼs notes "a very high likelihood that the Government of Hungary (Baa3) would provide support if the city were to face acute liquidity stress."

Moodyʼs stresses that its statement does not constitute a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.