These bonds are part of the government’s broader financing strategy aimed at addressing the central government’s budget deficit and refinancing maturing public debt. The proceeds from green bonds within the issuance will be used to fund or refinance eligible green expenditures.
The Baa2 rating reflects Hungary’s long-term issuer rating, supported by a diversified economy with robust growth prospects and a commitment to gradual fiscal consolidation. This approach should help reduce the country’s relatively high debt burden over the next five years.
However, challenges persist, including a contentious relationship with the European Union, delayed EU funds, and structural risks to Hungary’s longer-term growth outlook, the agency noted.. Hungary also remains susceptible to geopolitical risks, although its exposure to Russian energy imports has decreased since 2022.
Hungary’s stable outlook indicates balanced risks at the Baa2 level. Significant investments, including foreign direct investment in electric vehicle production, and an expected recovery in private consumption will support economic growth. However, reliance on Russian gas and ongoing challenges with EU relations could impact future fiscal and economic stability.
Moody’s also highlighted Hungary’s exposure to social risks, such as demographic challenges that could affect long-term growth and fiscal sustainability. However, the government’s commitment to fiscal prudence and policy effectiveness was noted positively.
An improvement in EU relations or significant fiscal consolidation could lead to an upgrade, while further deterioration in EU relations or prolonged energy disruptions could result in a downgrade.
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