US EditionMoody's cuts Budapest's rating to junk due to row with national government
Moody's cited liquidity concerns and ongoing political disputes over solidarity payments as reasons for downgrading Budapest's credit to speculative grade.
- On Monday, Moody's downgraded Budapest to Ba1, citing liquidity concerns and a liquidity position disclosure, recorded as issued on 30/12/2025.
- Earlier this month, Hungary's parliament passed a bill that could force Budapest to borrow under unclear conditions and make Mayor Gergely Karacsony criminally liable, while the capital must pay 'solidarity' contributions to Prime Minister Viktor Orbán's central government.
- The levies have surged almost nine-fold since 2019 and equalled about one fifth of the capital's revenues this year, while Moody's cited uncertainty around transfers and very weak liquidity.
- Moody's warned it could downgrade further if tensions persist, saying it may reassess support amid strained central-local relations while Karacsony said Budapest, population about 1.6 million, faces insolvency.
- The move comes ahead of parliamentary elections in spring, testing Prime Minister Viktor Orbán's 16-year rule amid the municipality's multiple lawsuits arguing the tax is unconstitutional.
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In the Moody’s assessment, the emphasis falls on the liquidity situation. The Agency notes that information on the availability of the numbering of Budapest raises serious signs of the ability of the municipality to cover urgent payments. The problem is not only of the political disputes, but of the funds currently available to cover the immediate deadlines.Moody’s points to the uncertainty related to the normal transfers from the central level,…
Moody’s reduced Budapest’s credit rating from Baa3 to Ba1, placing the city in the high-risk category, known as “junk”. In addition, the agency has put the rating under review for a possible new fall, due to the highest risk of non-payment. Article Shoc in Hungary: Moody’s puts Budapest at “junk”. The alarm signal for Bucharest! appeared for the first time in Romania TV.
The Moody’s financial rating agency has withdrawn the credit rating of Budapest last night to the speculative category, calling for a “increased risk of unpaid” on the basis of tensions between the primary ecologist and his nationalist government...
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Moody's lowers city of Budapest's rating to junk
Ratings agency Moody's downgraded the city of Budapest's credit rating to junk level late Monday, pointing to weak liquidity and an increased default risk amid a row between Prime Minister Viktor Orban's nationalist government and the capital's opposition mayor.
The capital's downgrade has become official following the decision of the credit rating agency. The move will likely have serious financial impacts on Budapest's economy. The city's creditworthiness has deteriorated. According to financial analyses, this decision could lead to the halt of developments and the increase in the cost of loans. Financing everyday public services could also become more difficult in the future.
Moody's cuts Budapest's rating to junk due to row with national government
Ratings agency Moody's has downgraded Budapest's credit rating to Ba1 from Baa3 and placed it on review for a further reduction, citing its weak liquidity and a financial dispute with Viktor Orban's national government.
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