Moody's affirmed their Baa2/Negative sovereign rating to Hungary on Friday

HUNGARY - In Brief 01 Jun 2025 by Istvan Racz

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This means that the government has escaped a downgrading from a key rating agency for now. But the negative outlook was maintained, and Moody's will review their rating again no later than November 28. The next review by a top-3 agency is due in a week's time, by Fitch Ratings, currently rating Hungary at BBB/Stable, on June 6. The latest top-3 rating decision on Hungary was S&P changing its BBB- outlook to negative from stable on April 11, which evoked the threat that the government could fall to sub-investment grade at an agency of key importance.It appears that the key factor holding Moody's back from a downgrade was their view that the government have shown signs of genuine commitment to fiscal consolidation. By the way, we share this basic conclusion, despite all the various threats and problems with the government budget and fiscal policies.On the other side, the key risks Moody's saw were: (a) the threats that further big amounts of EU transfers originally earmarked for Hungary could get finally and definitively lost; and (b) fiscal policy could be significantly loosened up between now and the election due in April 2026. Unfortunately, we have only bad news on (a), whereas we are bound to follow a wait-and-see attitude on (b), acknowledging that Moody's related concerns are not at all unfounded.