According to Mr. Barcza, the agency likes to see a strong mixture of domestic and foreign investors as well as banks financing Hungary’s cash flow and that the investors are happy to see a less concentrated ownership structure in the state bonds.
The 2008 financial crisis underlined the importance of how a country’s debt is structured. When the Orbán Government took over in 2010, it pursued an ambitious policy to reduce the state’s overall debt and also change its structure, cultivating a higher percentage of domestic investors a higher percentage of debt in the Hungarian currency to reduce exposure to foreign exchange risks.
Talking about the future, Mr. Barcza welcomed the government’s proposal for a zero-based deficit, calling it a revolutionary step toward the reduction of the country’s debt-to-GDP ratio, which would further reduce exposure.
Regarding the upgrade of the country’s credit rating and returning Hungary to investment grade, a move many analysts expect rating agencies to take this year, Mr. Barcza said that the market has already almost fully calculated into the bond price the economic results of such an upgrade.