Moody'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's credit rating from Baa3 to Ba1, citing liquidity concerns and a financial dispute with the government.
- The capital is required to pay 'solidarity' contributions to Prime Minister Viktor Orbán's central government, and earlier this month Hungarian parliament passed a bill risking criminal liability for Budapest mayor Gergely Karacsony.
- Moody's pointed to 'very weak liquidity' and uncertain transfers, noting the levies have increased nearly nine-fold since 2019 and now comprise about one fifth of Budapest's revenues.
- Moody's warned it could downgrade further if tensions persist, saying it would consider this if strained relations continue and Budapest's 1.6 million population faces insolvency, Karacsony warned.
- The action comes ahead of parliamentary elections in spring, with the municipality filing multiple lawsuits arguing the tax is unconstitutional as Prime Minister Viktor Orbán faces a test to his 16-year rule.
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42 Articles
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The Moody’s financial rating agency has withdrawn the credit rating of Budapest last night to the speculative category, calling for a “increased risk of unpaid” on the basis of tensions between the primary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...
It depends on a single day and the government's decision whether Budapest will become insolvent or not. If the government does not transfer 12 billion to support public transport by tomorrow at the latest, then it is certain that the capital will not be able to access an overdraft in January, and the consequences could be unpredictable. Years of debate about the solidarity contribution, the legacy of the 2008 financial crisis and Budapest's unev…
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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.
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