Moody's lowers Hungary bonds to A3

Moody's Investors Service said it lowered the local- and foreign-currency government bond ratings and the country ceiling for foreign-currency bank deposits of the Republic of Hungary to A3 from A2. These ratings carry a negative outlook.

The country ceilings for foreign- and local-currency bonds and local-currency bank deposits (Aa1, Aaa and Aaa, respectively) are not affected.

In light of constrained access to external market-based funding and the extraordinary global conditions, Hungary was extended a €5 billion swap line with the European Central Bank, even though it is not a member of the Eurozone, and received a further commitment of loans from the European Commission in connection with a $25 billion IMF-led support package.

The agency said the very necessity for the loan package as well as its size highlight the inadequacies of the economic policy approach pursued by Hungary during the past few years, which are now exacerbating the country's vulnerabilities during the current risk-averse global climate.

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