Scope Ratings plays pivotal role in the development of Hungary's capital market

Scope Ratings is playing a central role in helping Hungary's central bank deepen and develop the central European country’s capital markets through an innovative bond-buying programme which began in 2019.

The goal of Magyar Nemzeti Bank is to diversify the sources of funding for local companies beyond bank loans to encourage investment, create jobs and underpin economic growth in Hungary.

An essential part of the MNB’s initiative was to recruit Scope, Europe’s leading credit rating agency, as one of the principal providers of ratings for Hungarian companies without which their debt could not qualify for the bank’s purchase programme.

The move by MNB has proved far-sighted. The Covid-19 shock in 2020 and its severe economic consequences prompted central banks in Europe, including the European Central Bank, to provide emergency extra liquidity for government and companies through new and extended bond-buying programmes.

The MNB’s total purchases under its programme of quantitative easing stood at HUF 1.14trn (EUR 3.19bn) in mid-January 2021 – equivalent to around 2.2% of GDP - with purchases running at around HUF 40bn a week.

Scope has around 70 mandates for rating leading Hungarian companies as part of the MNB’s “Bond Funding for Growth Scheme.”

The corporate bonds are denominated in Hungarian forint and have maturities of between three and 10 years. Acceptance into the MNB programme requires an issuance rating of at least B+. The ratings for bond issues – within the framework of BGS – are made public. The MNB, which will buy up to 70% of a single bond, launched the bond-buying programme on 1 July 2019.