Fitch Ratings said it assigned Hungary's $3 billion ten-year bond and $750 million 30-year bond, placed last Thursday, 'BBB-' ratings, in line with the country's 'BBB-' Long-term foreign currency Issuer Default Rating (IDR).
Fitch downgraded Hungary's sovereign rating to 'BBB-', one notch above “junk”, with a negative outlook, on December 23, 2010.
“The downgrade reflected a material worsening in the underlying medium-term budget position, while relatively high levels of public, external and domestic foreign-currency bank debt leave the country vulnerable to negative shocks,” Fitch said.
Fitch called a structural reform program, dubbed the Széll Kálmán plan, unveiled by the government on March 1 “an important step towards addressing the medium-term budget deficit”. The program outlines fiscal measures worth HUF 550 billion, or 1.8% of GDP in 2012, and HUF 900 billion, or 2.8% of GDP, by 2013.
The government also announced measures that it hopes will create 300,000 jobs by 2014 and boost the GDP growth rate to 4-6%, Fitch noted.
The ratings company said some details of the measures “have yet to be fleshed out” and it sees “some implementation risks” for the fiscal consolidation program. It said the growth target is “optimistic”.