Moody's downgraded Hungary from A3 to Baa1
After the S&P downgrading seen yesterday, today another credit rating agency, the Moody's announced that they cut Hungary's current rating to 'Baa1' from ‘A3’. The outlook of the new rating is negative.
According to the agency, the actions reflect the impact of the current economic crisis on the Hungarian government's financial strength. „When the global economic crisis set in, the Hungarian economy was already in a weak position relative to its Central European peers. Given its sizeable external financing needs, Hungary is particularly exposed to the current environment." Moody's believes Hungary is hampered by its limited monetary and fiscal policy maneuver, due to exchange rate weakness and adversely affected debt metrics, respectively.
Please note however, that before this announcement Hungary’s rating at the Moody’s had been three notches higher than at the S&P and two notches higher than at the Fitch.
Market reaction: neutral, as even after this step, Hungary’s current rating at the Moody’s is still standing above the ratings of both the S&P and the Fitch. The real danger could come from the S&P, as more downgrading from their side pushes the country’s sovereign rating into non-investment category.
