10.6 C
December 3, 2021

Hungary borrowing costs rise on junk downgrade

The implied cost of borrowing for Hungary has risen after ratings agency Standard & Poor’s (S&P) downgraded the country’s debt to junk status, BBC informs. The interest rate, or yield, on 10-year government bonds traded on the secondary market rose from 9 pc to 9.3 pc after S&P cut Hungary’s rating to BB+ from BBB- on Wednesday night. S&P said it had doubts about the independence of Hungary’s central bank. The Hungarian government immediately criticised the downgrade. “[The decision] is clearly not based on the assessment of the facts of the Hungarian economy and financial system – it is pressure from market players interested in strengthening the dollar zone and weakening the eurozone,” the Economy Ministry said in a statement. “In our view, the predictability of Hungary’s policy framework continues to weaken, harming Hungary’s medium-term growth prospects,” the agency said. Last week, the European Commission and the IMF cut short informal aid talks with Hungary due to worries over the independence of its central bank. S&P also cited heightened risks to the country’s ability to repay its debts due to the weakening domestic and global economic outlook.

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