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Standard and Poor's lowers MÁV long-term credit rating

Standard and Poor's Rating Services on Thursday said it lowered its long-term corporate credit rating on Hungarian state-owned railway company MÁV to 'B+' from 'BB', while revising CreditWatch implications to developing from negative.


MÁV's short-term rating remains at 'B'.

"The downgrade follows our downward revision of MÁV's stand-alone credit profile (SACP) to 'CCC+' from the 'B' category together with our view of MÁV's "very weak" liquidity situation on a stand-alone basis, that is, excluding expectations of extraordinary government support," said Standard and Poor's credit analyst Timon Binder.

The 'B+' long-term rating on MÁV reflects Standard and Poor's opinion that there is a "very high likelihood that the Republic of Hungary (BBB-/Stable/A-3) would provide timely and sufficient extraordinary support to MÁV in the event of financial distress, Standard and Poor's said.

"We understand that MÁV will have to cover material cash needs in 2010 with short-term credit lines....because it is not sufficiently compensated by the government to maintain the network and is generating losses," Standard and Poor's said.

"We expect to be able to resolve the CreditWatch listing within the next three months, following discussions with the new Hungarian government to gain greater visibility on its strategy for MÁV and the level and type of extraordinary support the government will provide," Binder said. (MTI-ECONEWS)