S&P Global Ratings has affirmed Hungary’s ‘BBB’ sovereign rating but changed the outlook to stable from positive in light of pandemic-related risks. The rating action was not taken during a scheduled review, but S&P noted that European Union regulations allow deviations from its announced calendar under exceptional circumstances. Hungary’s rating reflect Hungary’s revised economic growth outlook, changes to the fiscal trajectory and monetary stimulus responses in 2020 and 2021, the rating agency said.
“We believe that the negative repercussions of the public health emergency have moved risks to Hungary’s sovereign credit quality over the next 24 months into balance. The stable outlook reflects our view that downside macroeconomic risks stemming from the COVID-19 pandemic will be mitigated by the country’s strong policy response and projected economic rebound in Hungary’s key trading partners in 2021. The outlook also reflects our expectation that fiscal deficits will remain contained after the one-off expansion in 2020,” S&P said, commenting on the change in outlook. S&P previously changed the outlook on the rating on Feb. 14 to positive from stable. Its next review of Hungary’s rating is scheduled for Aug. 14.