London analysts: Hungary IG upgrade this week ‘probably too early’ but not impossible



Hungaryʼs upgrade to investment grade by Moodyʼs this week would seem “a little early”, though there is “an outside chance” that it could happen, London-based emerging markets economists said on Friday. 

Moodyʼs is set to review Hungaryʼs “Ba1” sovereign rating, one notch below investment grade and on a positive outlook, on Friday. An upgrade would lift Hungary back to an investment grade rating.

In their “CEEMEA Compass” weekly emerging markets update, released to clients in London, Morgan Stanleyʼs economists said they rate the chances of an upgrade by Moodyʼs next week at 20%.

However, “we believe that upgrades will come later in the year, possibly in July”. Hungaryʼs second review by Moodyʼs is scheduled for July 8. Morgan Stanleyʼs analysts said, however, that Hungary is “on the way to regaining an investment grade rating”.

“We think that at least two of the rating agencies will upgrade Hungary in 2016, on the back of improving debt metrics and a more predictable policy backdrop ... We also think that 2016 might be the year that the relationship between the banking system and the government returns to normal”, they added.


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