Moody's may drop Budapest

Moody's Investors Service said it has placed the Baa1 foreign and local currency ratings of the City of Budapest on review for possible downgrade.

This rating action follows Moody's decision to place the sovereign ratings of Hungary on review for possible downgrade on July 23, the agency said.

Moody's added that its rating action on the City of Budapest reflects the close links between the city and the sovereign given that (1) a large proportion of municipal direct debt benefits from a state guarantee and (2) the presence of cross-default provisions that creates a link with the rest of the city's debt.

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