S&P puts Hungary ratings on negative credit watch

BUDAPEST: Standard and Poors was the second ratings agency to issue a warning to Hungary over its credit rating, saying in a statement the country's unpredictable policy moves weigh on its medium-term growth prospects.

The agency placed Hungary's 'BBB-/A-3' foreign and local currency sovereign credit ratings on CreditWatch with negative implications. That follows fellow agency Fitch's decision on Friday cut Hungary's outlook to negative from stable.

The country is rated just above "junk" debt status at all the three main rating agencies now.

"The rating action reflects our view that a more unpredictable policy environment, stemming from a weakening of oversight institutions and some budgetary revenue decisions, will have a negative effect on economic growth and government finances," S&P said in a statement.

It said downside risks to Hungary's creditworthiness were increasing as the external financial and economic environment was weakening.

S&P added it was likely to decide on Hungary this month "pending further information from the Hungarian government regarding how it will address the ongoing economic challenges."

Copyright Reuters, 2011