S&P: Hungary rates just below investment grade
Standard & Poorʼs Ratings Services announced on Friday that it was increasing Hungaryʼs credit rating, from BB to BB+, which is an improvement but still not good enough for S&P to recommend investing in Hungarian sovereign debt.
S&P also saw reason to improve its forecast for growth in Hungary. "We now expect the Hungarian economy to expand by an estimated 2.5% on average in real terms between 2015 and 2017, up from our previously published expectations of just over 2%," the ratings company was cited as saying.
Reasons that S&P gave for the improvements in the countryʼs outlook reportedly include Hungaryʼs relatively safe position with regard to external debt, the countryʼs consistent account surpluses over five years, a strong finish for GDP growth in 2014, cheaper fuel prices and better-than-anticipated demand from European trading partners.
Hungaryʼs current S&P rating of BB+ means the rating company still considers Hungarian debt to be in the so-called "junk bond" category, but according to S&P, this level is "considered highest speculative grade by market participants." If Hungary is upgraded one grade higher, to BBB, the countryʼs debt would be "considered lowest investment grade by market participants," according to S&P.
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