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Péter Ákos Bod on the upgrade: we will remain two notches above the bubble level

Let’s see what happened. There was some excitement over Moody’s decision, published late on 24 September, to upgrade Hungary’s sovereign debt rating from Baa3 to Baa2, and to add a stable outlook to the new rating, instead of the previous positive one.

Some analysts were not surprised by the decision, which follows the rating agency’s usual review procedure, as the positive outlook has been attached to the rating for some time, which means that if there is no adverse change, the rating will be upgraded one notch in the next review cycle and the stable outlook will be automatically attached.
Moody’s uses a different letter scale, but with Baa2 it has now essentially joined the others.
Moderate government presence in the economy – why Moody’s upgraded our rating
Moderate government presence in the economy – why Moody’s upgraded our rating
The rating agency justified Hungary’s upgrade on the grounds of the reliability of key institutions and the strong predictability of government actions.

Others were surprised by the decision, as the rating had not been touched in the spring and there was reason to believe that the change would be postponed again. It could even be called unexpected, given that on the very morning of the decision Mr Orbán had announced new spending plans on state radio (“We must fight to speed up the restoration of the thirteenth month pension and ensure that pensioners receive not only the second week but also the third and possibly fourth week’s extra next year”).

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