Hungary faces the risk of further downgrades of its credit rating after Fitch Thursday cut Hungary’s sovereign debt by one notch to BBB-.
The risk of a further downgrade of Hungary’s credit rating could increase in case of further intensification of the euro area crisis, said Citigroup economist Piotr Kalisz. Citi doesn’t expect a downgrade to non-investment grade in the near term, but markets could start pricing in such a risk especially if the government fails to present a credible fiscal adjustment plan.
Although the downgrade came as no surprise, the forint reacted by weakening to the euro. Fitch followed Moody’s Investors Service Inc. and Standard & Poor’s Corp. in putting Hungary’s rating to one grade above junk.
Fitch Ratings on Thursday downgraded Portugal’s credit rating to A+ from AA-. The agency also downgraded Portugal’s short-term currency rating to F1 from F1+. The Associated Press said that Fitch cited a slow reduction in Portugal’s deficit and a tougher financing environment as reasons for the downgrade. The euro bought $1.3098, an improvement from earlier in the U.S. session, and slightly up from late Wednesday.
Anybody think the sovereign debt crisis is over?