Uncreditable credit rating agencies

Yesterday’s news was that the credit rating agency Fitch affirmed Hungary’s credit rating in the “junk grade”.    They really didn’t bother much about the steadily improving macroeconomic figures Hungary has been producing recently (the budget deficit being firmly below 3%, GDP growth becoming stronger than  expected, a big trade balance surplus, Hungary’s stopping the growth of its public debt, the slightly decreasing unemployment rate while the  economic activity is increasing (!), the all time low inflation rate or the steady demand for Hungary’s treasury bills at an all time low base rate, etc.).  The key sentence in their report must have been this: “Fiscal discipline contrasts with unpredictable economic policies, especially with respect to the banking and utilities sectors.”  In other words:  the Financial Empire strikes back.

Where’s the red bean? (aka the shell game)

Let’s note that the big (US-based) credit rating agencies (Fitch, Standard and Poor’s and Moody’s)  rated Hungary’s creditworthiness  many, many grade higher, in the “investment grade” in the autumn of 2008 when, due to the economic amok running of the so-called Socialists and Liberals,  Hungary de facto defaulted and only a 25 billion Euro EU/IMF-loan, which was fully repaid  by the Orbán government seven months before its expiry, could save the country from the financial collapse.   In contrast,  these credit rating agencies all lowered Hungary’s rating to the “junk” category at the end of 2010 when it became apparent to them that the Orbán government is not going to dance to the IMF tune.

And what was the market reaction at today’s Hungarian government bond auction to the “junk bond” evaluation of Fitch yesterday evening  ?  Significant yield drops on all the bond types.

Leave a comment


  1. Reblogged this on Politics in Hungary and commented:

    S&P has affirmed BB Hungary’s Rating. That means “non-Investment grade”, commonly called “junk”. Hungary had the highest GDP growth (3.9%) in Europe in the second quarter of 2014 and the yields on Hungary’s bonds have fallen even more (1.4% on the 3-month T-bills).

    I think the best thing is just to reblog a post of mine I wrote in last December.


  2. Is it a coincidence that these agencies are owned by Jews and that the Hungarian left that was defeated in 2010 is ran by Jews?

    Just a curious question….


  3. Zoli

     /  17/12/2013

    And one more thing. Fitch cited FX debt as one of the main reasons why they did not return Hungary to investment grade. As a Fidesz suporter, you should pick up on that.


  4. Zoli

     /  17/12/2013

    Credit rating agencies lost much credibility during the US sub-prime fiasco. That is why bond yields no longer reflect their ratings. Not to say that what they are doing in regards to Hungary is not damaging, because there are still people who foolishly thrust in their integrity.



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