Hungary 'Junked' By Moody's

Tyler Durden's picture

Citing uncertainty over the country's ability to meet 'austerity' targets and its rising susceptibility to external shocks - given its heavy reliance on external investors - Moody's just downgraded Hungary to Junk Ba1 (with a negative outlook) 

Moody's Statement Summary:

The key drivers for the downgrade and negative outlook are as follows:


1.) The rising uncertainty surrounding the country's ability to meet its medium-term targets for fiscal consolidation and public sector debt reduction, particularly given Hungary's increasingly constrained medium-term growth prospects.


2.) The increased susceptibility to event risk stemming from the government's high debt burden, heavy reliance on external investors and large financing needs as the country enters a period of heightened external market volatility.


Moody's believes that the combined impact of these factors will adversely impact the government's financial strength and erode its shock-absorption capacity. The rating agency's decision to maintain a negative outlook on Hungary's ratings is driven by the uncertainty surrounding the country's ability to withstand potential event risks emanating from the European sovereign debt crisis.


Moody's has also downgraded by one notch to Ba1 from Baa3 the foreign-currency debt rating of the National Bank of Hungary (NBH) given that the Republic of Hungary is legally responsible for the payments on NBH's bonds.


With its 10Y yield currently at 9%, only 190bps wider than Italy, we thought it somewhat ironic that Hungary's average 10Y yield from SEP09 to SEP11 was 7.2% - almost exactly where Italy finds itself trading currently.


Chart: Bloomberg

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Mongo's picture

Isn't Sarkozy 50% hungarian?...

dlmaniac's picture

Moody's is hungry so they eat Hungary.

Michael's picture

I know this thought should be in the top topic but somehow with another country being cut to junk, it seems just as appropriate.

Are we taking bets on how many people will be trampled to death in tonights kickoff to the holiday shopping season? I guess at least 3 shoppers will be dead by morning. Is there an intrade trade on the body count this year? Last year we had a few deaths and it seems every year big box stores kill more and more of their customers with their loss leader policies and such.

"Three violent deaths in two stores marred the opening of the Christmas shopping season Friday.

In the first, a temporary Wal-Mart employee was trampled to death in a rush of thousands of early morning shoppers as he and other employees attempted to unlock the doors of a Long Island, New York, store at 5 a.m., police said.

In the second, unrelated incident, two men were shot dead in a Toys "R" Us in Palm Desert, California, after they argued in the store, police said."

This is just one story but I do enjoy the stories of customers being trampled to death most. Perhaps the big box stores should offer their customers Sumo outfits for protection from the onslaught.

Sumo Suit Showdown


TheFourthStooge-ing's picture

Michael started the office betting pool with:

Are we taking bets on how many people will be trampled to death in tonights kickoff to the holiday shopping season? I guess at least 3 shoppers will be dead by morning.

The way things have gone this year, I think we may be due for a new record. Put me down for seven.


High Plains Drifter's picture

for the most part, it seems like nothing but a big chimp out. heck most of those idiots are there to see what they can shoplift......

Carlyle Groupie's picture

Nobody's Hungry on Thanksgiving eve.

A'merikans are all trippin on (2S)-2-amino-3-(1H-indol-3-yl)propanoic acid.

It makes them shop better. Hungry for Xmas cheer.

Carlyle Groupie's picture

Did he say "This compound is a controlled substance
and therefore can not be bought through MolPort!"

Oh no he didnt girlfriend!

Carlyle Groupie's picture

"The anthranilate synthase-phosphoribosyl transferase complex of the tryptophan biosynthetic pathway in Salmonella typhimurium is an allosteric, heterotetrameric (TrpE2-TrpD2) enzyme whose multiple activities are negatively feedback-regulated by L-tryptophan [14]."

Oh sweet flu shots batman! Did someone drug up my Turkey?

Carlyle Groupie's picture

Are you getting sleepy my little zheeple. You can tell me.

Describe how you feel about 20-30 minutes after consumption of the traditional meat product.

Try to meditate in a quiet area and observe the inner turmoil. Let us know how you feel.

jerry_theking_lawler's picture

nope. its a myth...there are only traces of your amino acid trip2phan. you get sleepy because you gorge yourself on 2000+ calories so your blood sugar gets whacked out....

vast-dom's picture

Let's now JUNK France and USA and purge this motherfucker. PIIGS is....well.....if Hungary got it then what is Moody's waiting for? Kickbacks? 

SheepleLOVEcheddarbaybiscuits's picture

junking will certainly be the bees knees this holiday season

sabra1's picture

but he's 100% asshole!

if i'm correct, hitler was also hungarian!

i'd like to see all politicians hung....

WonderDawg's picture

The way politicians lie, I'm sure they'd tell you they are hung.

Hansel's picture

Is financial disfunction in Europe still news?

Zero Govt's picture

they shouldn't rate the Govt debt, they should rate the key moving compenent: politicians

the financial solvency follows the quality of the polticos and Hungaries are crooks (like Greece, Ireland, Portugal, Spain, Latvia, Britain, er well you get it by now, the whole of Europe basically)

Moodys et al rating inanimate objects like Bonds and calling them "junk" is the wrong end of the stick... rate the politicians somewhere between Responsible and Bit of a Twat and Thieving Crook

High Plains Drifter's picture

if american pension funds bought hungarian bonds,  they could maintain their 8 percent fund appreciation mandate and still have a point to go...........duh?  

Sabremesh's picture

So I'm losing track, which European countries are junk now? Greece, Portugal, Estonia, Belarus, Hungary, Ireland, Italy, Iceland, Moldova, Albania? Spain and Ukraine on the brink, any others? To be frank, it's just a matter of time before the entire continent is reduced to junk, and this will take the rest of the world down with it.

Ethics Gradient's picture

Looking at your list, you'd be forgiven for thinking that Europe was run by a bunch of fuckwits.

Spastica Rex's picture

Bulgaria standing proud at Baa2!

Vlad's picture

Romania is still at Baa3, 'grats for the upgrade this summer ;)

The Limerick King's picture



I'm thankful I'm not European

With all of this chaos I'm seein'

When the shit hits the fan

(Which is part of the plan)

I'd be packin' my bullion and fleein'

q99x2's picture

The bankers and ratings agencies are not able to junk Russia and China. At least not until their bioweapons doomsday "Mars lunar mission" satellite moves out of Earth's orbit.

agent default's picture

Huh? You know something the rest of us don't? 

And how do we long this?

PolishHammer's picture

You forgot about Poland...well it's getting there

Roger Knights's picture

Belgium is facing a downgrade, I think (but not to junk--yet).

slaughterer's picture

EXCEEELLLENTTT!   I havde been short Hungarian bonds for the last 5 years.  

achmachat's picture

I own a beautiful pure silver commemoration medal issued by the Hungarian national bank.

That's the only Hungarian-related thing I've ever had and I like it.

koperniuk666's picture

Well I liked the gulash.


Wasnt so keen on the botty sex though.....


UP Forester's picture

I've still got some Forints.  At the time, it was 260 Forints per $1.  And Euros were par.

Now it's only 235.  I guess with the USD declining 25% against the Euro and 10% against a currency backed by junk bonds in 9 years, we're all totally screwed.

AUD's picture

Couldn't those two criteria be equally applied to the US or UK or even Australia, Canada, Japan.....?

agent default's picture

Just sit back and wait.  This will be beyond funny.

Note to self: Start stacking pop corn along your silver.

Bumblebee Tuna's picture

My wife has some "Hungarian Bonds' in her Trunk... if you know what I mean

Spastica Rex's picture

Your wife? Don't you mean your mom?

Bumblebee Tuna's picture

My mom has Argentinian Bonds in her trunk... it's been there for a while.

Tijuana Donkey Show's picture

The key is to withdraw before you yield, or your paying a penalty for 18 years..... 

Bumblebee Tuna's picture

Bahaha +1

Good thing I finished my coffee before reading this

chump666's picture

EZ junk bonds overkill, now the EUR unwind.  USD will be bought like mad Asian session

Piranhanoia's picture

"Who's Goldfinger going to make prime minister now uncle Baron?"

doggings's picture

what effect does this have on Switzerland if any? .. lots of CHF denominated mortgage debt in Hungary isnt there?

Im thinking that peg is going to get torn apart any time soon,  time to buy CHF with EUR shortly methinks

Vlad's picture

I hear it's about 60% in CHF. I still don't get it why consumers want to take on FX risk. If Goldman can't predict the exchange rate how can they?

hungarianboy's picture

cause over here back then the intrest rate difference was huge between HUF and CHF. ( Still is )