06.01.2012
By Simon Miller
Fitch Ratings has downgraded Hungary to BB+ with a negative outlook following concerns over its government's "unorthodox economic policies".
Fitch said that further deterioration in the country's fiscal and external financing environment and growth outlook, was caused in part by further unorthodox economic policies which were "undermining investor confidence and complicating the agreement of a new IMF/EU deal".
When Fitch put Hungary's ratings on Negative Outlook on 11 November 2011, it cited negative rating drivers as a worse than anticipated economic slowdown, and a rise in the risk premium and fiscal financing pressure. In the agency's view these risks have materialised.
The ratings note added: "Fiscal and external financing risks have increased significantly since early November, owing to a deterioration in investor sentiment. Hungary's high stock of government, external and private sector foreign currency debt and large associated financing requirements leave it vulnerable to adverse swings in investor confidence."
The Hungarian government faces external debt repayments of €4.6bn (£3.8bn) in 2012 as well as large non-resident holdings of domestic debt to roll-over.
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