S&P raises Hungary credit rating to “stable”

Ratings

Ratings agency Standard and Poor’s this morning reported a revision to its outlook on the long-term sovereign credit ratings on from “negative” to “stable,” reflecting the “rebalancing” of the country’s economy and “steadying economic prospects.” At the same time, S&P affirmed the ‘BB/B’ long- and short-term foreign and local currency sovereign credit ratings. S&P also affirmed the ‘BB’ long-term issuer credit rating on the National Bank of Hungary (MNB).

“The stable outlook balances our assessment of Hungary’s stabilizing economy and relatively steady headline fiscal performance against still-high stocks of foreign debt amid generally less-predictable policymaking,” read the S&P analysis in part.

S&P said the ratings could be raised if the government were to “establish policies that encourage investment, while implementing its structural reform program” as well as if there is “a sustained reduction in external debt net of liquid assets, even as economic growth strengthens.”

Conversely, ratings could be lowered if “Hungary’s economic recovery weakens significantly more than we currently expect; if banks accelerate their withdrawal of credit; or if external or public finances weaken materially.” S&P revised upward its average GDP growth expectations for Hungary for 2014-2015 to about 2%, in line with central government projections.

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