MANILA (Updated) -- The Philippines received on Thursday its second investment grade rating, this time from the Standard & Poor's (S&P).
S&P said it raised its sovereign rating on the Philippines to BBB minus from BB plus. It said the outlook for the rating was stable.
The upgrade reflects a "strengthening external profile, moderating inflation, and the government's declining reliance on foreign currency debt," S&P credit analyst Agost Benard said.
Last March, Fitch Rating's gave the Philippines its first-ever investment grade rating, citing the country's current account surplus and status as a creditor nation.
Presidential spokesman Edwin Lacierda said the upgrade indicates sustained confidence in the Philippine economy, which grew 6.6 percent last year, adding it was an affirmation of the Aquino administration’s good governance initiatives.
"It also helps enable lower costs for borrowing, which equals lower costs for hospitals, schools, and other vital structural improvements for the benefit of our people," he said.
Lacierda also said that the upgrade was a collective effort of the Filipinos.
"Truly, kayo ang gumawa nito (You made it happen)," he said.
Finance Secretary Cesar Purisima, for his part, said the latest development in the country's credit rating affirmed the Philippines' strong economic and fiscal gains.
"This investment grade rating is another resounding vote of confidence on the Philippines and an affirmation of what the markets already recognize – that our economy's underlying soundness is on par with countries rated investment grade or higher," he said in a statement.
He said the government will continue to focus on infrastructure development, on creating a larger fiscal space to support social investments, and on further opening up the economy.
S&P said in a statement that the Philippines has created a substantial foreign exchange reserve buffer with its current account surpluses, which will be sustained "over the next several years" by continued remittances from the country's large overseas labor force and the growing business process outsourcing industry.
It said modest net foreign investments and net portfolio equity inflows have also contributed to the surplus.
"The buffer makes for low refinancing risk and an import cover ratio well above prudential norms," it said, adding that "low and fairly stable" inflation also supported the rating upgrade.
The country's low income level is holding back a higher rating, with per capita gross domestic product projected at $2,850 this year, which is "below that of most similarly rated sovereigns," it said.
Other factors that hamper the country's growth include infrastructure shortfalls, restrictions on foreign ownership of some businesses that deter foreign investment and the "concentrated nature of the economy," it said.(SDR/With AP/Sunnex)
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