Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

Forint Weakens Most in Three Weeks as S&P Cuts Hungary’s Rating

Don't Miss Out —
Follow us on:

Nov. 23 (Bloomberg) -- The forint depreciated the most this month after Standard & Poor’s cut Hungary’s credit rating by one step to BB, citing a deteriorating economic outlook.

The currency of Hungary, the most indebted of the European Union’s eastern members, weakened 1 percent to 282.30 against the euro by 7:03 p.m. in Budapest, the biggest daily drop since Oct. 29, according to data compiled by Bloomberg. The yield on 10-year government bonds rose one basis point, or 0.01 percentage point, to 6.93 percent, the data show.

S&P lowered Hungary’s rating to two steps below investment grade, on par with Portugal, Macedonia and Turkey, saying Prime Minister Viktor Orban’s “unorthodox” policies eroded medium-term economic-growth prospects. Levies applied to the financial and services industries may “eventually undermine the government’s efforts to sustainably” reduce debt, S&P said.

“I am negative on Hungary at the moment -- short Hungarian assets,” Timothy Ash, head of emerging-market research at Standard Bank Group Ltd. in London, said in a note to clients. “But this move in the ratings is a bit hard to justify.”

While Hungary is running a fiscal deficit of around 3 percent of gross domestic product and its public debt will fall to 73 percent of output, S&P cut its rating to a level on par with Portugal, which has a deficit of 5 percent and debt of 120 percent, according to Ash.

Hungary’s credit-default swaps fell four basis points today to 298, the highest among Europe’s 17 emerging markets following Ukraine, according to data compiled by Bloomberg. The extra yield on Hungary’s dollar bonds over U.S. Treasuries was unchanged at 370 basis points, according to indexes compiled by JPMorgan Chase & Co.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net