Research Update: Ratings On Hungary Raised To 'BBB-/A-3' On Improving Fiscal, External, And Growth Expectations; Outlook Stable

Hungary's fiscal, external, and GDP outcomes have improved markedly since 2008, when Hungarian authorities applied to the European Union and the IMF for financial assistance. We now expect GDP growth to average 2.5% over 2016-2019 (versus our previous forecast of 2.0%), while government debt and gross external financing needs decline further. We also observe a moderation of more activist monetary policies, such as the central bank's provision of interest rate hedging to the market via the "Self-Financing Programme." The sovereign now finances itself predominantly in local currency bonded commercial debt and at maturities of up to 15 years. We are therefore raising our sovereign credit ratings on Hungary to 'BBB-/A-3' from 'BB+/B'. The outlook is stable. On Sept. 16, 2016,

...Hungary's fiscal, external, and GDP outcomes have improved markedly since 2008, + when Hungarian authorities applied to the European Union and the IMF for financial assistance. We now expect GDP growth to average 2.5% over 2016-2019 (versus our previous + forecast of 2.0%), while government debt and gross external financing needs decline further. We also observe a moderation of more activist monetary policies, such as the + central bank's provision of interest rate hedging to the market via the "Self- Financing Programme." The sovereign now finances itself predominantly in local currency bonded + commercial debt and at maturities of up to 15 years. We are therefore raising our sovereign credit ratings on Hungary to '###-/A-3' + from '##+/B'. The outlook is stable. +...

Research Update