Hungary sovereign credit may be upgraded in November 2016

HUNGARY - In Brief 30 Dec 2015 by Istvan Racz
The top three rating agencies published their revision dates for Hungary's sovereign credit for 2016. Moody's will make its first revision on March 4, followed by July 8 and then by November 4. S&P will look at Hungary on March 18 and September 16, and Fitch Ratings will do so on May 20 and November 18. We believe that Hungary's sovereign rating may indeed be raised back to investment grade in 2016, but only if rating agencies see that the country has got through the upcoming EU transfer shock, i.e. the expected drop of the inflow of EU development grants next year, in good condition, without major setbacks in growth and/or in fiscal stability. To establish if the latter condition has been met, rating agencies must see at least H1 developments. In other words, we think that any upgrade can come on September 16 (S&P), November 4 (Moody's) or November 18 (Fitch Ratings), assuming good performance from Hungary until then of course. Traditionally, Moody's tends to be the most positive on Hungary out of the three agencies, and S&P is by far the most conservative. This means the most likely time for the first Hungary upgrade (if at all) is November 2016.

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