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Moody's reconsidered the classification of Hungarian public debt



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Moody's reconsidered the classification of Hungarian public debt

MTI Image: reuters

November 18, 2018

Next week, Moody's Investors Service will review Hungary's public debt rating for the second time this year, completing this year's series of critical reviews of Hungary.

In its international rating scale for 2018, Hungary first appeared on June 1 and will be on Friday, November 23.

Based on the established practice, the company expects to announce its decision in London on Friday after closing the European and American market.

Unlike its previous practice, Moody's has not yet selected three possible audits for 2018, just like the other two global market leaders, S & P Global Ratings and Fitch Ratings. However, for the first time in June this year, the company did not consider the status of Hungary as a taxpayer, so it did not report on rating changes or its prospects.

Moody's recently changed the debt rating of the Hungarian government to the target date of November 4, 2016: the credit rating company reclassified Hungary into the category of investment recommendations, the upgrade from "Ba1" to the currently valid, stable point "Baa3" sovereign classification .

Since then, Hungary has been presented on Moodiia's agenda within four scheduled audits – before the date of June last March, 3 July and October 20 – but the credit rating did not at any time make any additional revisions.

On the basis of EU regulations that are established after the global financial crisis, unless an unusual development requires a direct qualification decision, credit agencies can, in their pre-determined and announced date, only execute the debt debt classification steps for EU debtors in each calendar year.

However, the prior determination of the date does not oblige rating agencies to make proper ratings of the ratings in those days.

These leading international rating agencies set a total of six or two times this year to review the rating of debtors from the Hungarian public sector, but none of them announced changes in five previous times.

S & P Global Ratings – Standard & Poor's Classification of Credit Rating Divisions – first entered Hungary on February 16 and August 17 this year and confirmed long-term and short-term liabilities related to Hungary's foreign currency debt, and forintu Rating "BBB minus / A-3" with investment recommendation with unchanged positive attitudes.

Similarly, Fitch Ratings, which this year's first and second time, March 9 and August 31, marked the Hungarian rating, with positive prospects for improving the long-term BBB minus compared to the Hungarian rating of the country.

S & P and Fitch will not look to Hungary in 2018, and next Friday, the rating of Hungarian debt will not be re-listed in Moody's revisions this year.

The current Baa3 rating in the Moody's methodology, despite the basic level of the proposed public debt category and despite the different marking methodology, is identical to the rating of the Hungarian rating held by the other two global rating agencies.

All three companies have returned Hungary to the investment recommendations 2016, but S & P and Fitch have improved the prospects for Hungary's classification as positive for last year's upgrade. Accordingly, Moody's is the only one of the three largest companies with a stable view of Hungary's public debt rating.

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