UPDATE 1-Ratings agencies concerned about Hungary

* Moody’s says Hungarian comments a credit negative

* Says comments renew focus on public, external debt

(Combines Moody’s, Fitch comments, adds S&P comment)

LONDON, June 7 (BestGrowthStock) – Warnings from Hungarian officials
last week about a potential sovereign debt default raise
questions about the country’s fiscal outlook and could be
negative for its credit rating, rating agencies said on Monday.

Moody’s said comments made by officials in Hungary’s new
centre-right Fidesz government suggesting the country was close
to a Greek-style economic meltdown were “inflammatory” and came
at “a delicate time” for global markets. [ID:nLDE6550I7]

“The statements are a credit negative because they bring
renewed attention to Hungary’s high public and external debts,
which, by threatening to drive up interest rates and push down
the exchange rate, endanger Hungary’s economic recovery,”
Moody’s analyst Dietmar Hornung said in Moody’s weekly credit
outlook.

David Heslam, director of Fitch Ratings’ emerging Europe
sovereigns, said the comments would not affect Hungary’s funding
options but ultimately played into a “key ratings driver” — its
fiscal path.

“We are concerned about the fiscal outlook post-elections…
Given the high level of debt, there is little room for policy
slippage,” he told Reuters.

Noting that Hungary still had a multilateral financing
programme with the International Monetary Fund that has yet to
be drawn this year, Heslam said Fitch would wait to see further
details of the government’s new fiscal measures before moving on
its credit rating.

Moody’s Hornung said the new government displayed an
“apparent willingness to adopt unorthodox measures to stimulate
economic growth” which was also sparking concerns.

“In our view, these uncertainties threaten to further impair
Hungary’s creditworthiness,” Hornung added.

Moody’s has Hungary’s Baa1-rated government bonds on
negative outlook. Fitch has Hungary’s ratings at BBB with a
negative outlook.

Standard & Poor’s, which has Hungary’s ratings at BBB- with
a stable outlook, said in a statement:

“We will review the government’s report on public finances
and the government’s action plan before we would comment
further.”

Investing
(Reporting by Sebastian Tong and Carolyn Cohn; editing by )

UPDATE 1-Ratings agencies concerned about Hungary