Fitch changes outlook on Hungary’s LTFC rating to stable


Fitch Ratings has on Monday changed the outlook on Hungary’s BBB+ LTFC rating to stable from a long standing negative rating.

Gábor Ambrus, 4Cast, London
“The rating action comes as a response to fiscal consolidation that visibly affected internal and external balances. Fitch has far long been the most pessimistic agency as to Hungarian rating, its current decision moves Hungary in line with S&P and Moody’s. An upgrade by any of the major agencies seems far away in time, given the general lack of confidence in the continuation of the consolidation as the 2010 elections approach."

Dániel Bebesy, CIB Bank, Budapest
Fitch rating agency affirmed Hungary’s long-term foreign currency rating at BBB+, and at the same time the outlook has been revised to stable from negative. According to the agency, the upgrade reflects confidence that the government will meet its targets on the budget front. However the agency added in its statement that the significant share of foreigners among the bond holders, increasing FX denominated private sector debt, and the overall the large external financing needs relative to peers still makes Hungary vulnerable. The agency also claimed that the outlook was less promising, commitment to further fiscal consolidation could vain as elections approach, and this could renew a downward pressure on the rating. Euro per Forint show moderate impact, the cross firmed to 252.50 from levels above 253."

Silja Sepping, Lehman Brothers, London
“The outlook upgrade should be positive, especially for the back end of the curve, as it assures that the government’s fiscal consolidation is on track. Although we remain positive on the fiscal outlook, a rating upgrade by any major agency in the near-term seems unlikely in our view, as the agencies would probably prefer to wait for the budget outcome in 2007 and the final 2008 budget draft.”

Concorde Call, Budapest
“In our view the decision of Fitch is well founded, but it is more about the political steps of the recent future and its expectations about the future are similar to ours. At the same time this is an acknowledgement of Hungary’s positive budgetary developments, which would contribute to the decrease of long bond premiums, which are still relatively high. We expect long forint yields to come down to around 5.5% by the end of 2008.” (

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