Moody’s cut Hungary’s current rating from A2 to A3
This afternoon, Moody’s credit rating agency announced that they cut Hungary's current rating from A2 to A3, with negative outlook. So far, the Moody’s has not been as active in changing the ratings and outlooks as the other two credit rating agencies (Fitch and the S&P). Thus, the current A3 rating is still one notch higher than the BBB+ ratings of the Fitch and the S&P. Taking the earlier two-notch difference into consideration, today’s step should not cause big surprises on the markets, although it has arrived at a very bad time.
The agency said that many years, Hungary had had somewhat weaker macroeconomic and debt indicators than those of its rating peers. They added, however, that positioning of the rating in the mid-A category reflected the prospective benefits of further EU integration.
Market reaction: immediately negative, the forint weakened to 270 EUR/HUF, then it has corrected to the levels seen before the announcement.
