Ratings agencies concerned about Hungary
* Moody's says Hungarian comments a credit negative * Says comments renew focus on public, external debt
(Combines Moody's, Fitch comments, adds S&P comment)
LONDON, June 7 (Reuters) - Warnings from Hungarian officials last week about a potential sovereign debt default raise questions about the country's fiscal outlook and could be negative for its credit rating, rating agencies said on Monday.
Moody's said comments made by officials in Hungary's new centre-right Fidesz government suggesting the country was close to a Greek-style economic meltdown were inflammatory and came at a delicate time for global markets. [ID:nLDE6550I7]
The statements are a credit negative because they bring renewed attention to Hungary's high public and external debts, which, by threatening to drive up interest rates and push down the exchange rate, endanger Hungary's economic recovery, Moody's analyst Dietmar Hornung said in Moody's weekly credit outlook.
David Heslam, director of Fitch Ratings' emerging Europe sovereigns, said the comments would not affect Hungary's funding options but ultimately played into a key ratings driver -- its fiscal path.
We are concerned about the fiscal outlook post-elections... Given the high level of debt, there is little room for policy slippage, he told Reuters.
Noting that Hungary still had a multilateral financing programme with the International Monetary Fund that has yet to be drawn this year, Heslam said Fitch would wait to see further details of the government's new fiscal measures before moving on its credit rating.
Moody's Hornung said the new government displayed an apparent willingness to adopt unorthodox measures to stimulate economic growth which was also sparking concerns.
In our view, these uncertainties threaten to further impair Hungary's creditworthiness, Hornung added.
Moody's has Hungary's Baa1-rated government bonds on negative outlook. Fitch has Hungary's ratings at BBB with a negative outlook.
Standard & Poor's, which has Hungary's ratings at BBB- with a stable outlook, said in a statement:
We will review the government's report on public finances and the government's action plan before we would comment further. (Reporting by Sebastian Tong and Carolyn Cohn; editing by )
© Copyright Thomson Reuters 2024. All rights reserved.