The Philippines maintained its long-term, foreign currency rating of “BBB” with Standard & Poor’s, which expects the economy to remain on a solid growth trajectory given sound fundamentals.
S&P assigned a “stable” outlook on the rating, which is one notch above the minimum investment grade and which was assigned to the Philippines in May last year.
S&P cited a host of factors that are likely to keep the positive trend for the Philippines, including strong external payments position, improved fiscal situation, stable financial system, within-target inflation, robust domestic consumption, and young labor market.
Meantime, economic government officials said that the Philippines is aiming for credit ratings within the “A” category over the medium term.
For S&P, the minimum rating within the A category is A-. This is just two notches away from the Philippines’ current rating of BBB.
“Fundamentals of the Philippines significantly improved over the last few years. With the trend staying positive, additional upgrades in the credit ratings over the medium term should be achievable,” Governor Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas said.
“On the part of the BSP, efforts to further improve the regulatory environment for financial institutions, maintain price stability, and strengthen external payments position would be its contributions to placing the economy on an even higher gear,” Tetangco said.
Finance Secretary Cesar Purisima said a credit rating in the “A” category should be attainable, especially since the Philippines still remains underrated if one would compare the country’s credit ratings with how the market prices Philippine debt papers.
“If compared with those of other emerging markets, fundamentals of the Philippines are one of the strongest. And with continually improving major credit indicators, including debt manageability, credit ratings ideally should adjust accordingly,” Purisima said.
Upon the assumption of President Aquino into office in 2010, the goal was simply to secure the minimum investment grade from all three major international credit-rating firms (Fitch Ratings, Moody’s Investors Service, and S&P) by 2016.
At the moment, the Philippines is rated a notch above the minimum by both S&P and Moody’s at BBB and Baa2, respectively. The economy has the minimum investment grade of BBB- with Fitch.
“Throughout the past five years of pursuing initiatives toward good governance, we have managed to outperform even our own targets and expectations. Moving forward, we expect to sustain the reform momentum and to raise the bar even higher,” he added.
“We have seen the benefits of a reform-oriented leadership, and we should see more gains ahead,” Purisima said.
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