Hungary: Fitch affirms sovereign debt rating - ING

Peter Virovacz, Senior Economist at ING, notes that Fitch Ratings affirmed Hungary's sovereign debt rating at ‘BBB-‘ and confirmed its positive outlook, in line with ING’s expectations.

Key Quotes

“Despite a number of positive developments, Fitch found enough worrying reasons to leave Hungary's rating intact. As the agency only awarded Hungary a positive outlook in November 2017, this decision is less surprising than S&P's two weeks ago, which also just affirmed its rating with a positive outlook.”

“In its review, Fitch pointed to the strong structural indicators, such as the sustained current account surpluses and net equity FDI and EU capital inflows, which have helped to improve the external position.”

“It also highlighted the improving structure of public debt, emphasising the decreasing share of FX debt and non-resident holdings of debt securities.”

“But Fitch also fell back on a traditional excuse for not issuing an upgrade: general government debt levels, which are nearly double the current 'BBB' median. This factor counteracted the positives.”

“According to Fitch's analysis, a continued reduction in external indebtedness and sustained current account surpluses could lead to an upgrade.”

“Hungary has now missed out on its chance for an upgrade this year, as S&P and Fitch won't review their ratings again in 2018. We expect improvements to continue both in the fiscal and macro indicators and we think an upgrade to 'BBB' could come next year.”