S&P cuts Hungarian State Railways

Standard & Poor's said it lowered the long-term issuer credit rating on Hungarian State Railways Co. Ltd. to BB from BB+ following the downgrade of the ratings on the Republic of Hungary to BBB-/A-3 from BBB/A-3. The B short-term rating was affirmed.

The outlook is negative.

The downgrade on the sovereign reflects the ongoing deterioration in key Hungarian economic and fiscal indicators, according to the agency.

"Standard & Poor's applies a top-down rating approach to MAV, notching down from the rating on the sovereign because MAV is a government-related entity and plays a central role in meeting political and economic objectives," S&P analyst Timon Binder said in a statement.

"The long-term rating is two notches lower than those on the Hungary, reflecting the absence of direct state guarantees for MAV's total debt and that timely financial support is not explicitly guaranteed."

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