Jan. 16 (Bloomberg) -- Hungarian stocks declined the first time in three after Standard & Poor’s cut the credit ratings of nine euro-zone nations including Austria, for which it cited banks’ exposure to its neighbor Hungary.
The benchmark BUX stock index slid as much as 1.2 percent and traded 0.5 percent weaker at 17,260.59 by 10:25 a.m. in Budapest. OTP Bank Nyrt., Hungary’s largest lender, fell 0.7 percent and Gedeon Richter Nyrt., the country’s biggest drugmaker, slumped 0.8 percent. The yield on government bonds due in 2022 rose one basis point to 9.698 percent.
Austria lost its AAA rating at S&P’s because of its links to neighbors Italy, its second-biggest trading partner, and Hungary, where the Alpine country’s banks are among the biggest lenders, the rating company said on Jan. 14. S&P, which also lowered France’s AAA rating and that of seven other European Union nations, stripped Hungary of its investment-grade ranking in December, one of the three rating companies to move Hungary to junk in the last two months.
“Everyone is digesting the S&P downgrade of nine EU nations this morning,” Levente Blaho and Adam Keszeg, Budapest-based equities analysts at Raiffeisen Bank International AG, wrote in a research report.
The currency of Hungary, the EU’s most indebted eastern member, strengthened 0.1 percent to 310.17 per euro.
The government will take all necessary steps to reach its budget targets and meet spending goals because a recession is possible, Economy Ministry State Secretary Zoltan Csefalvay told public television M1 today.
Csefalvay’s comments helped support the forint, the Raiffeisen analysts wrote.
To contact the reporter on this story: Andras Gergely in Budapest at firstname.lastname@example.org
To contact the editor responsible for this story: Gavin Serkin at email@example.com