Fitch Ratings said Friday it assigned the Republic of Hungary's five-year €1 billion eurobond a ‘BBB’ rating, in line with Hungary's Long-term foreign currency Issuer Default Rating. The latter rating has a Negative Outlook. Fitch said the foreign bond was an important move away from non-market financing and called the revised 2009 budget realistic.
The issue priced on Friday matures on July 28, 2014 and has fixed coupon of 6.75% per annum. The bonds are issued at a price of 99.835% at a spread at 395 basis points over five-year euro mid-swaps.
The following is the text of Fitch's comments in the press release:
“Hungary's return to the eurobond market, for the first time since June 2008 and since its €20 billion IMF-led support package agreed in October 2008, increases its range of financing options and is an important step towards eventually exiting from official support. It follows the restart of regular auctions of HUF-denominated bonds in April 2009 and an increase in the volume of issuance over the past month.
Fitch believes the revised 2009 budget deficit target of 3.9% of GDP is realistic following the fiscal consolidation measures passed by parliament in May, after the appointment of the new technocratic Prime Minister Gordon Bajnai.
His government's plans for further fiscal tightening measures in 2010 are encouraging, but will be put to the test in the autumn as parliament debates the 2010 budget.
This will come against a background of deep recession - Fitch expects GDP to contract 6.7% this year - and parliamentary elections that must be held by April 2010.“ (MTI-ECONEWS)