S&P raises PHL credit rating a notch above investment grade
A year after it raised the Philippine sovereign debt rating to investment grade, Standard & Poor's Ratings Services again upgraded the country's foreign currency denominated and peso debts a notch above the coveted credit rating.
This time, the debt watcher gave the Philippines a long-term sovereign credit rating of "BBB" from "BBB-", and upgraded its short-term rating to "A-2" from "A-3".
“The outlook is stable,” the debt-watcher noted, signifying a change in the ratings will not likely happen in the next 12 months.
"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," Standard & Poor's credit analyst Agost Benard noted in an e-mailed statement to reporters.
The debt watcher also noted the upgrade "reflects the country's strong external liquidity and international investment position, combined with an effective monetary policy framework relative to the country's income level," while maintaining low inflation and interest rates.
The upgrade from S&P came a month after Fitch Ratings affirmed the investment grade on the country's foreign currency denominated and peso debts.
S&P gave the Philippines an investment grade rating on May 2, 2013. It was the second upgrade from practically junk status since Fitch Ratings gave the Southeast Asian country its first ever investment grade status in March 2013.
In a separate statement, Finance Secretary Cesar Purisima noted the S&P upgrade was a recognition of the "remarkable economic comeback" the Philippines has so far achieved since President Benigno Aquino III took over the helm of government in 2010.
"This is further proof of President Aquino's belief that good governance is good economics," he said.
"We will continue to institutionalize good governance so our country's economic growth is both sustainable and inclusive. This has been the 19th positive credit rating action since President Aquino took office and the fourth upgrade from S&P," Purisima added.
In raising the ratings, S&P said: "We expect ongoing reforms on a broad range of structural, administrative, institutional, and governance issues to endure beyond the term of the current administration."
Bangko Sentral Governor Amando M. Tetangco, Jr. said this is a major feat, as S&P did a straight upgrade without first assigning "... a positive outlook before upgrading the rating.
"This action is further affirmation of the country's strong macroeconornic fundamentals," he said, noting the Philippines has proven it can sustain growth since S&P raised the Philippine credit rating to investment grade last year, the central bank chief said.
The central bank will continue to support growth amid a low-inflation environment, Tetangco said.
"We stand ready to adjust our monetary policy stance and adopt macroprudential measures, as appropriate, to guard against risks that would unsettle inflation expectations and threaten the soundness of our financial system," he said.
"We will also continue to craft external sector policies that will help keep our external liquidity position strong," Tetangco added. – VS, GMA News
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