Fitch Ratings, one of the top three international rating agencies, announced on Friday that it had downgraded Hungary's credit rating to junk status, citing a standoff between the government and international lenders over possible rescue loans.
Fitch Ratings cut Hungary's credit rating by one notch to BB+ from BBB-, saying the downgrade reflects further deterioration in the country's fiscal and external financing environment and growth outlook caused in part by further unorthodox economic policies.
The rating agency also maintained the negative on Hungary's ratings, indicating a probability greater than 50 percent of another downgrade within the next two years
"A further increase in fiscal and external financing risks and the failure to secure a timely and appropriate IMF agreement could lead to a downgrade," Fitch said in its statement. "A deeper contraction in economic activity than currently expected; evidence of an increase in private sector capital outflows; a material weakening in the government's commitment to fiscal consolidation or destabilizing unorthodox policy measures could also lead to a downgrade."
Fitch's downgrade came after similar actions taken by Moody' s and Standard & Poor's, two other major rating agencies, last month. Now, all three agencies had put Hungary's rating to junk status.