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May 23, 2016

Hungary's financial rating upgraded to investment grade

Fitch became the first to improve Hungary’s sovereign debt rating from “junk" status to “investment grade”

Hungary's financial rating has been upgraded to ‘investment grade’ by Fitch Ratings.

Fitch, one of the 'big 3' global credit ratings agencies, became the first to upgrade Hungary’s sovereign debt rating from “junk" status to “investment grade” since Hungary was downgraded five years ago.

Fitch gave Hungary a BBB- rating, up from BB+ with the justification that “tighter fiscal policy has been consistent with a gradual decline in government debt from a high level”, while also attributing the upgrade to high account surpluses and EU fund inflows. Fitch said that it anticipates Hungaryʼs debt to decline slowly in the medium term.

The last time Fitch released a rating on Hungary’s long-term foreign currency debt, November 20, the ratings agency said that the desired upgrade from junk status to investment grade requires three elements: Greater political stability and an improved business environment; continued reductions in external indebtedness, supported by current account surpluses; and a reduction in the government debt ratio.

The next major ratings agency to report on Hungary’s sovereign debt will be Moody’s, which has an announcement scheduled for July 8 regarding the nation's status.