S&P upgrades PHL rating to ‘BBB’

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Category: Top News

08 May 2014

 

Written by Cai U. Ordinario

A year after the Philippines received its first investment-grade rating from an international credit-rating agency, Standard & Poor’s (S&P) Ratings Services awarded the country another credit-rating upgrade on Thursday.

With the latest upgrade, the Philippines’s credit rating is now “BBB” with a stable outlook. This was a notch higher than an earlier rating of triple-B minus or “BBB-”, which the country received in May 2013.

S&P said it upgraded the credit stature of the Philippines on the basis of confidence on reforms undertaken under the Aquino administration that will likely be preserved by the next administration.  “We raised the ratings because we now believe the ongoing reforms to address shortcomings in structural, administrative, institutional and governance areas will endure beyond the current administration,” S&P said. 

“Even though a change of administration after the presidential elections in 2016 represents some uncertainty for reforms, the risks have shifted toward maintaining the impetus and direction of the process, away from a potential reversal or abandonment of advances achieved to date,” it added.

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S&P said that apart from raising the long-term sovereign credit rating of the country, it also upgraded its short-term rating to “A-2” from “A-3” with a stable outlook. The credit-rating agency also said it raised its Asean regional scale rating to “axA/axA-2”, from “axA-/axA-2” as well as the transfer and convertibility assessment to “BBB+” from “BBB”.

Bangko Central ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. welcomed the latest action by S&P, saying that this was an affirmation of the country’s strong macroeconomic fundamentals and overall economic resilience.  “The BSP welcomes the decision of S&P to upgrade the Philipines’s long-term sovereign credit rating by one notch, from “BBB-” to “BBB”. This is a major feat as S&P did a straight upgrade. They no longer assigned a positive outlook before upgrading the rating,” Tetangco said.  “Since S&P raised the Philippines’s credit rating to investment grade in May 2013, the Philippines proved that it is able to sustain high economic growth despite external volatility and, in the case of last year, successive domestic natural disasters,” he added. However, S&P acknowledged that the country’s low-income level will remain a key constraint to further improving its credit rating.