Fitch upgrades Hungary, bonds to BBB-

Fitch Ratings said it upgraded Hungary's long-term foreign currency issuer default rating to BBB- from BB+ and affirmed the long-term local currency issuer default rating at BBB-.

The issue rating on Hungary's senior unsecured foreign currency bonds was upgraded to BBB- from BB+. The issue rating on the local currency bonds was affirmed at BBB-.

The outlooks on the long-term issuer default ratings are stable.

The country ceiling was revised to A- from BBB and the short-term foreign-currency issuer default rating upgraded to F3 from B.

Fitch said the combination of high current account surpluses, high European Union (EU) fund inflows, banks' external deleveraging, the self-financing program and foreign currency mortgage conversion have contributed to a sharp improvement in Hungary's external balance sheet and reduction in vulnerability. Net external debt (NXD) reduced to 48% of GDP in 3Q15 from 73% in 2012 (based on Fitch's methodology which differs from the Hungarian central bank methodology). Fitch forecasts a further fall in NXD in the coming years.

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