Moody's cuts Hungary's rating to 'junk'
28 November 2011
Credit rating agency Moody's has slashed Hungary's government bond rating to "junk" – about the same as India and some other developing countries - citing high debt levels, weak growth prospects and uncertainty about its ability to meet fiscal goals.
Moody's cut Hungary's government bond rating by one notch to Ba1, below investment-grade with a negative outlook, hours after rival agency Standard & Poor's held fire on a downgrade on news of Budapest's efforts to get international aid.
Hungarian economy minister Gyorgy Matolcsy told a press conference in Budapest on Friday, soon after the downgrade, that Hungary's currency, bonds and credit-default swaps are under a ''speculative attack'' and the downgrade by Moody's isn't justified by the economy's ''strong fundamentals''.
He added that the government must reach an agreement with the International Monetary Fund on a credit line, and that Hungary doesn't plan to use any aid and wants to continue financing debt from the markets.
''Hungary would like a flexible credit line, which, as its name suggests, is the most flexible one,'' Matolcsy said. ''It doesn't look like we would be eligible for this so we would like a precautionary credit line or a precautionary standby agreement.
Hungary returned to the International Monetary Fund and the European Union last week after its currency, the forint, fell to record lows against the euro in the wake of a warning by S&P that Hungary could lose its investment-grade credit score.