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Analysts: Moodyʼs likelier to upgrade Hungary later, not today

Ratings

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Moodyʼs could raise Hungaryʼs sovereign rating to investment grade today, but it is more likely that the ratings agency will wait until later this year for an upgrade, analysts told Hungarian news agency MTI yesterday.

Moodyʼs is scheduled to make an announcement on a review of Hungaryʼs “Ba1” sovereign rating, which is one notch under investment grade, after 10:00 pm today, local time. Last November, Moodyʼs changed the outlook on the rating to “positive” from “stable”.

ING Bank chief analyst András Balatoni said he did not expect an upgrade on Friday, but would not exclude one either. Considering the outlook was changed just last November, an upgrade is likelier to come following the next reviews, due in July or November, he added.

K&H Bank senior analyst Dávid Németh said the chances of an upgrade are more likely in July. The ratings agencies could wait to see how Hungaryʼs financing requirement shapes up in the period leading up to May, when a number of big FX bonds will mature, he added.

Hungary must repay a £500 million bond in March, a CHF 200 mln bond in May and a €1 billion bond in July. A €1.5 bln installment on a loan from the European Commission is also due in the second quarter.

Németh said the chance of an upgrade would be more likely if the government submits a more conservative budget for 2017 to lawmakers.

Erste Bank analyst Vivien Barczel also said she did not expect an upgrade to come on Friday, although she did not exclude the possibility that markets would speculate there would be one, temporarily lifting the forint and causing yields to fall.

Fitch and Standard & Poorʼs also rate Hungary just under investment grade.

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