FXstreet.com (Barcelona) - Moody's Investor's service has cut Hungary's government bond rating from Baa3 to Ba1, with a negative outlook. The downgrade comes after the country requested financial aid from the EU and the IMF earlier this week.

The main reasons for Moody's action was Hungary's high level of debt, a slowdown in economic growth and uncertainty whether the country is able to “meet its targets on fiscal consolidation and public sector debt reduction.”

The agency justified its decision by stating that: "Moody's believes that the combined impact of these factors will adversely impact the government's financial strength and erode its shock-absorption capacity. The rating agency's decision to maintain a negative outlook on Hungary's ratings is driven by the uncertainty surrounding the country's ability to withstand potential event risks emanating from the European sovereign debt crisis."