Another upgrade to BBB/Stable, from Fitch Ratings this time

HUNGARY - In Brief 24 Feb 2019 by Istvan Racz
Just one week after S&P's similar move, Fitch Ratings upgraded the government of Hungary to BBB/Stable on February 22, from the previous BBB-/Positive level, at which Hungary had been staying since November 2017. The agency's reasoning was quite similar to S&P's: they were impressed by the recent decrease by the government debt ratio and net external debt to GDP, in addition to rapid GDP growth and the historical performance on the BOP and also regarding price stability. Fitch specifically mentioned that net external debt fell to an estimated 10.2% of GDP last year, according to their methodology, which is quite close to the median value of 7.8% of GDP, measured for the BBB-rated countries at the agency.Major sovereign credit ratings and revision dates in 2019Sources: Moody's, S&P, Fitch Ratings, Portfolio.huThe upgrade was not at all unexpected, especially after S&P's positive decision a week ago, but it is still likely to moderately underpin the forint. The next review date at one of the top rating agencies will be at Moody's on May 3. An upgrade is also possible but less likely on that occasion, as Moody's has appeared markedly less enthusiastic about Hungary's performance than the other two agencies out of the Big Three. However, we see a roughly even chance for an improvement of the outlook, to Baa3/Positive.

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