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Moody's upgrades Budapest rating to A1

Ratings agency Moody's announced on Friday it has upgraded the foreign and local currency issuer ratings of the City of Budapest to A1 from A3, with a negative outlook.

Moody's said the upgrade was prompted by the increasing proportion of state guarantees in the city's stock of debt and the central government's generally supportive attitude to its capital city, as reflected in additional grants to its public transport company and significant co-funding of important urban projects. Additionally, Moody's cited positive changes to Budapest's institutional framework, as well as its recovering financial performance, its contained debt level going forward, large readily accessible cash reserves and liquid assets, and a solid economic profile. The city's large amount of non-earmarked reserves cover a significant proportion of its stock of debt, Moody's noted. Moody's said the city's negative outlook is ultimately linked to Hungary's negative outlook, which was downgraded from stable on February 22, 2006.