S&P lowers Budapest

Standard & Poor's said it lowered its long- and short-term issuer credit ratings on the City of Budapest to BBB/A-3 from BBB+/A-2.

At the same time, the ratings were removed from Creditwatch, where they had been placed with negative implications on Oct. 15, the agency said.

The outlook is negative.

According to the agency, the downgrade follows a similar action on the Republic of Hungary (BBB/negative/A-3), which guarantees about 50% of Budapest's debt.

Because all contract loans are linked by cross-default clauses, the agency said it closely links the ratings on Budapest to those on the sovereign.

However, the ratings on Budapest also reflect the city's solid economic profile, good financial performance, prudent debt management, and comfortable liquidity, the agency added.

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