Moody’s to review Hungarian debt rating this week

An upgrade is in the cards for Hungary

editor: REMIX NEWS
author: Dénes Albert

This week, international credit rating agency Moody’s Investors Service will examine Hungary’s sovereign debt rating. In its schedule for 2021, Moody’s has set for this year, Friday, March 26, the first review of the Hungarian sovereign debt rating for this year.

Three of the market-leading international credit rating agencies have set a total of six dates — two dates for each agency — for the examination of Hungary’s ratings for this year, in accordance with the established practice. Similar to the rating reviews of other EU sovereign debtors, these reviews will take place on Fridays. The other two global credit rating agencies, Standard & Poor’s and Fitch Ratings, have already conducted their first review of Hungarian debt ratings this year, both on Feb. 12, when the Hungarian sovereign debt ratings were confirmed with an unchanged “stable” outlook.

Moody’s Investors Service’s current “Baa3” Hungarian sovereign rating corresponds to “BBB minus” in the methodology of Fitch Ratings and Standard & Poor’s. However, two years ago, Fitch and S&P upgraded Hungary’s sovereign debt rating by one notch to “BBB”, so Moody’s maintains Hungary one rating lower than the other two credit rating agencies.

At the same time, Moody’s improved the outlook for the Hungarian sovereign debt rating from “stable” to “positive” in its last September review, saying that the negative impact of the coronavirus epidemic on Hungarian economic and financial strength is unlikely to be as pronounced as in other parts of the European Union.

Among the main factors in improving the outlook was the fact that the Hungarian economy has performed strongly in the recent period compared to the “Baa3” and even the better “Baa2” rated economies, and according to Moody’s, this is expected to continue in the future. All this is accompanied by an improvement in the domestic and external debt positions of the Hungarian economy, the credit rating agency said in its analysis.

The outlook for Fitch Ratings’ Hungarian sovereign debt ratings has been stable since the rating upgrade two years ago. Last February, Standard & Poor’s improved the outlook on the Hungarian sovereign debt rating to positive. Barely two months later, in April last year, however, it changed the Hungarian classification outlook back to the previous stable outlook, primarily justifying the move with the economic effects of the coronavirus epidemic.

However, Moody’s reiterated in its last country report on the Hungarian economy, presented in London recently, that its positive outlook on the Hungarian “Baa3” rating reflects the strong performance of the Hungarian economy compared to similarly rated sovereign debtors, and the company expects this to remain true. In the study, Moody’s also highlighted that, according to its data, between 2014 and 2019, Hungary’s gross domestic product grew by an average of 4.1 percent in real terms after a 0.3 percent annual decline in the period between 2007 and 2013.

The credit rating agency stated that it expects the performance of the Hungarian economy to increase by 3 percent this year and by 5.1 percent in 2022. The other two credit rating agencies expect a faster recovery in the Hungarian economy: Standard & Poor’s said in a detailed analysis of last month’s decision to confirm the Hungarian debt rating that it expects Hungarian GDP growth by 4.6 percent this year while Fitch Ratings estimates that Hungary’s gross domestic product will expand by 4.9 percent this year and 5.5 percent next year.

Title image: Suzuki plant in Esztergom, northern Hungary. (source:


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