Fitch Ratings on May 20 became the first major agency to raise Hungary’s debt rating out of “junk territory” after a series of downgrades that began about five years ago. Fitch improved Hungary’s sovereign debt rating to “BBB-” from “BB+”, moving it back to investment grade, and said the outlook for the rating is “stable”.
One ratings upgrade is helpful, but the government and analysts have said that two upgrades are needed to really reduce the cost of state borrowing. Analysts said it is expected that Standard and Poor’s will leave Hungary’s rating at “BB+”, just under investment grade, with a “stable” outlook this year.
London-based analysts said earlier that Moody’s is likely to return Hungary into investment category this year, but there is no consensus on whether this would be done this Friday or only in November. Moody’s changed the outlook on Hungary’s banking system to positive from stable last week, but the Brexit vote on June 23 cast a pall on European Union economies, and that may delay Hungaryʼs long-awaited upgrade.
The first of three reviews of Hungary’s debt rating by Moody’s came on March 4, when the agency left its “Ba1” rating, one notch below investment grade, unchanged. After Friday, Moody’s next assessment of Hungarian debt is scheduled for November 4.
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