Rating agency puts Hungary under negative

Standard & Poor\'s has put Hungary\'s credit rating (BBB-) on \"negative surveillance\", the ratings agency announced Saturday. \"Because of the rising risks that affect Hungary\'s financial credibility and the worsening external financial and economic environment S&P has put the Hungarian BBB- debt on negative surveillance,\" said the agency. S&P argued that Hungary\'s economic and political scene had become \"unpredictable because of the weakening of monitoring agencies and a number of decisions on budget receipts that will negatively affect Hungarian growth and state finances.\" Rating agencies\' \"negative surveillance\" is a more drastic step than \"negative outlook\" as it implies that the downgrade of a country\'s rating is imminent. S&P said it would take a decision on a prospective downgrade within weeks. Fitch ratings agency said Friday it had downgraded its rating outlook on Hungary to \'Negative\' from \'Stable\' due to pressures on external demand and financing problems. Fitch said it reaffirmed its main rating for Hungary at \"BBB-\". \"The revision ... reflects a sharp deterioration in the external growth and financing environment facing Hungary\'s small, open and relatively heavily indebted economy,\" Fitch said in a statement. \"Moreover, various fiscal policy measures and the scheme to allow the repayment of household foreign currency mortgages at below market exchange rates have dented foreign investor confidence, on which medium-term growth prospects depend,\" it said. The Hungarian forint came under further pressure this week, dropping to its lowest rate in two-and-a-half years against the euro after another bond sale fell flat because of a buyers\' strike as investors judged the risks too high. Hungary is currently graded one notch above junk status at the world\'s three main credit rating agencies. Investors have been fleeing Hungary due the economic policies pursued by Prime Minister Viktor Orban\'s government, foreign analysts say. On Tuesday, the European Central Bank warned that a scheme aimed at helping Hungarian borrowers struggling to repay foreign-currency-denominated loans posed a potential threat to banks in the region. The government has also levied extraordinary taxes on various sectors to fill budget holes caused by falling domestic consumption and effectively nationalised 11 billion euros ($15 billion) in assets held by private pension funds. Fitch said Friday that \"Hungary is particularly exposed to any deterioration in the economic and financial conditions in the eurozone\". It cited its open economy, the dominance of Western European-owned banks, and relatively high levels of public and external debt.