LONDON, Aug 3 (Reuters) - The cost of insuring Hungarian debt against default rose to its highest since late January on Wednesday after Hungarian local governments asked for a delay on principal payments on about 600 billion forints ($3.18 billion) of Swiss franc loans.
Hungary’s five-year credit default swaps rose 17 basis points to 338 bps, according to data from Markit.
Like thousands of households in Hungary, local governments have borrowed in Swiss francs and are suffering from the broadly stronger franc’s rise to record highs against the forint .
“Credit markets have not particularly appreciated the...move which would be tantamount to a restructuring,” said Tim Ash, head of CEEMEA research at RBS in a client note.
“The move is perhaps weighing on sentiment as this somehow implies a lack of willingness to pay on the part of some public sector entities.” (Reporting by Carolyn Cohn and Sujata Rao)