Fitch cuts Hungary rating

Fitch ratings agency said Friday it had downgraded its rating outlook on Hungary to “negative” from “stable” due to pressures on external demand and financing problems.

Fitch said it reaffirmed its main rating for Hungary at “BBB-.”

“The revision ... reflects a sharp deterioration in the external growth and financing environment facing Hungary’s small, open and relatively heavily indebted economy,” Fitch said in a statement.

“Moreover, various fiscal policy measures and the scheme to allow the repayment of household foreign currency mortgages at below market exchange rates have dented foreign investor confidence, on which medium-term growth prospects depend,” it said.

The Hungarian forint came under further pressure this week, dropping to its lowest rate in two-and-a-half years against the euro after another bond sale fell flat because of a buyers’ strike as investors judged the risks too high.

Hungary is currently graded one notch above junk status at the world’s three main credit rating agencies.

It is up for review by Standard and Poor’s and Moody’s, and analysts expect both of them to downgrade the country further.

Investors have been fleeing Hungary due the economic policies pursued by Prime Minister Viktor Orban’s government, foreign analysts say. 

(AFP)