Hungary’s economic boom vs credit rating agencies and the Economist

Hungary’s central bank has published the latest trade balance figures today. The trade balance surplus was  984 million Euros in the first quarter of 2014 and that’s more than double what it was a year earlier (463 millions).  There is a very significant increase compared to the last quarter of 2013, too (710 million Euros).

Hungary’s GDP growth was a “big surprise on the upside” again in the first quarter of 2014:  3.5%.  Foreign investments increased, too.  The inflation is zero so the central bank could safely cut   Hungary’s base rate to a new low of 2.3% today.

 

The CDS is the price of insurance against a particular country’s defaulting and it measures the risk of investors.  The higher it is, the higher the default risk is.  Let’s have a look at the CDS pricing of Hungary’s mid-term (10 year) government bonds. The CDS has reached pre-crisis levels.

 

CDS of 10-year Hungarian government bonds

 

In principle the big credit rating agencies rate the government bonds using such criteria as above. In reality they all rate the Hungarian government bonds in the “junk” category now and they all rated Hungary’s government bonds as “investment grade” in 2009… when the postcommunist MSZPSZDSZ coalition was busy ruining our economy… in the “orthodox way”, that is following orders coupled to the huge, 25 billion Euro loan they took out from the EU and IMF .

Yup, Hungary’s bonds were of “investment grade” when the CDS pricing was record high in 2009 and they became “junk” in 2011-2012 when the “unorthodox policies”, which seem to deliver big results by now, were implemented.

The downgrade of Hungary’s ratings reflects further deterioration in the country’s fiscal and external financing environment and growth outlook, caused in part by further unorthodox economic policies, which are undermining investor confidence and complicating the agreement of a new IMF/EU deal

Fitch wrote then.  Two years later Hungary’s GDP growth is one of the highest in Europe.

And what does The Economist  write about Hungary?  Well, only the usual libnazi bullsh*t  about Hungary’s role in the Holocaust and some more politically motivated drivel.   Yes, just check it out yourself with a search for the past month.  That’s about all those Economists have to say.

 

 

Advertisements
Previous Post
Next Post
Leave a comment

3 Comments

  1. The lack of tying ratings to economic performance only weakens investor confidence in the rating agencies. The IMF and ECB are all facing massive credibility issues, so they should lose the ideology and concentrate on finance!

    Reply

Please leave a meaningful reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: