Philippines upgraded to investment grade by Moody’s

Philippines upgraded to investment grade by Moody’s

MOODY'S Investors Service has upgraded the country's credit rating into investment grade.

In a statement today, the debt watcher said it has upgraded the Philippines’ rating by one notch to Baa3 -- a step into investment grade -- with a "positive" outlook, from Ba1 with a "stable" outlook.

Moody’s had placed the country’s rating on review for upgrade on July 25.

“The factors that prompted the review remain intact, namely the sustainability of the country's robust economic performance; ongoing fiscal and debt consolidation; and political stability and improved governance,” it said.

It added that the funding conditions in the country -- even amid the recent volatility in financial markets -- remained stable, and highlights the country’s “relative lack of vulnerability to external financial shocks, such as those arising from anticipated tapering by the US Federal Reserve of its quantitative easing policy.”

Moody’s said the country’s macroeconomic fundamentals remain robust, as evidenced by the 7.6% gross domestic product (GDP) growth it posted in the first half -- one of the fastest among Asia and other emerging markets.

It likewise noted that, even as growth has outperformed even the government’s expectations, inflation remains well-anchored.

“The new growth path is being reinforced in part by improved fiscal management. Revenue growth has accommodated sizable increases in infrastructure and social spending, although revenue generation remains weak when compared with investment-grade countries overall,” the debt watcher said.

The government’s prudent liability management also makes the country less vulnerable to external risks and reflects the country’s strong external accounts position and the ample liquidity in the domestic market.

“In addition, the Aquino administration has maintained its popularity among voters, which in turn supports the further institutionalization of reforms for good governance,” Moody’s said.

The upgrade from Moody’s places the country’s debt at investment grade among all major credit rating agencies, after Fitch Ratings and Standard & Poor’s earlier gave the country the much-coveted status in March and May, respectively. -- BWonline 3 Oct