Fitch cuts to "junk bond" the Hungarian debt rating

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Best Growth Stock – The rating agency Fitch lowered risk today sovereign debt rating of Hungary to the level of BB +, which is equating the “junk bond”, according to the local business press.

The agency placed a negative outlook on Hungarian debt, which does not rule out lower it in the future.

Fitch is the third rating agency reduces the sovereign debt rating of the country at this level, after Moody’s announced the decision on 6 December and 15 days later did Standard & Poor’s.

Fitch justified its action to worsening growth prospects in Hungary because of “unorthodox policy” that makes the agreement with the International Monetary Fund (IMF) and the European Union on a loan.

The agency said that in recent days the rate of the forint broke the record low against the euro and other currencies, and downgraded its previous forecast of growth of the Hungarian economy by 0.5 percent to 0.5 percent decrease .

Following the announcement by Fitch, both the forint and the Budapest Stock Exchange, BUX, reacted with a slight drop in corrected shortly.

Hungary announced last December that enter into negotiations with the EU and the IMF credit line of 15,000 preventive million and 20,000 million euros, contacts that are now discontinued.

The European Commission has criticized the Hungarian Central Bank Act, which restricts the independence of the issuing bank.

Brussels insisted yesterday he needs “beyond doubt” that the Hungarian Central Bank is fully independent before resuming the dialogue with the conservative government of Viktor Orban on the credit of the EU and the IMF.

For its part, the government spokesman Andras Giro-Szasz, called the move “surprising” because in the last days the forint recovered its value against the euro and the government “has clarified its position” on the negotiations with the IMF and the EU.

The spokesman was referring to the announcement of Budapest that is willing to start negotiations on the loan “without preconditions”.

Category: Business News