In its daily emerging markets update, released to clients in London, BofA Merrill Lynch Global Research, the London-based research unit of Bank of America-Merrill Lynch, said the courtʼs declaration that legislation forcing financial institutions to take part in covering the compensation costs for investors of the failed brokerage Quaestor is unlawful “could help arguments for a positive rating”.
The report says the legislation led to strong criticism from local banks, as “it went against the spirit” of the Memorandum of Understanding (MoU) signed between them, the EBRD and the government. Rating agencies view the MoU implementation as proof of governing Fideszʼs commitment to normalize the relationship with banks, a strong precondition for a rating upgrade.
Fitch is due to publish its review of Hungaryʼs ratings on Friday, with a positive outlook. “The timing is close but we expect a return to investment grade,” Bank of America-Merrill Lynchʼs London-based analysts said.
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