Questions on securities

Monday - Friday 09:00-17:00

Quick guide

Choose your country

Research Detail

2023/01/19 / Erste Group Research

CEE Special Report | Upcoming rating decisions


A couple of CEE countries had their outlook changed to negative over the last year. The energy shortages, the key risk for Czechia, Hungary and Slovakia did not materialize, becoming a neutral or even credit-positive factor. In the case of Czechia and Slovakia, it may, but does not have to, outweigh the risks stemming from pressure on public finance combined with political instability in Slovakia. For Hungary, however, unlocking EU funds will be a decisive factor in avoiding a downgrade.

We believe, however, that a change in outlook to negative by Fitch this Friday is a likely scenario. At the same time, we hope that a downgrade is still not in the cards. Having an open door for receiving funds from the RRF is a positive factor that may ward off the downgrade at this point. Just a week later, Hungary will be under the scrutiny of S&P. This rating agency changed the outlook to negative for Hungary in August 2022. At this point, we do not expect S&P to change the rating and to wait until there is more clarity regarding EU funds.

While the pressure on public finances remains a credit-negative factor for Czechia, reflecting uncertainty regarding structural fiscal imbalances over the medium term, the concerns over the impact of the energy crisis, and shutdown in gas supplies, did not materialize. In the upcoming evaluations, the way the energy crisis has been unfolding should thus become a more neutral factor in the rating assessment of Czechia and Slovakia. In Slovakia, the fall of the government, possibility of early elections in 2023, loose fiscal stance (high deficit, lack of consolidation strategy and structural reforms with looming early elections) come at a moment when all three rating agencies (S&P, Moody’s and Fitch) see Slovakia’s outlook as negative. The lack of political and fiscal stability is a negative factor when it comes to credibility assessment, given the negative outlook, making a downgrade a viable option.


PDF Download Download PDF (252kB)

General information

AuthorErste Group Research
Date2023/01/19
Languageen
Product nameCEE Economies Special Report
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Czech Republic, Hungary, Romania, Slovakia
Currency in focusCzech Koruna, Euro, Hungarian Forint, Romanian Leu
Sector in focus-
Download




Decline
Accept

We use cookies and web analysis software to give you the best possible experience on our website. If you consent, these tools will be used. For more details please read our Data protection policy.

INFORMATION FOR PRIVATE CLIENTS / CONSUMERS

Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended). For this reason, the distribution or redistribution of the information, materials and products into United States or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited. The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.