March 11, 2014

Philippines may get another credit rating upgrade this year

MANILA, Philippines - Will the Philippines get another credit rating upgrade this year?

BSP Deputy Governor Diwa Guinigundo said the Philippines may get a further credit rating as early as this year.

"Given that one of the credit rating agencies has given us a positive credit outlook and given that Fitch will also provide some positive review after they came here, it's possible that we can have another upgrade," he said.

The Philippines already has investment grade ratings from the top three credit ratings agencies, Fitch, Standard & Poor's and Moody's. They cited the strong economic growth, improved governance and structural reforms of the Aquino administration.

Guinigundo said a team from Fitch concluded its annual visit and assessment last month. S&P and Moody's are also expected to conduct their reviews in the first half of the year.

Last March, Fitch gave the Philippines its first investment grade rating, upgrading the country's credit rating to BBB- with a stable outlook. S&P followed suit with a BBB- rating with stable outlook in May, while Moody's gave the Philippines a Baa3 in October with a positive outlook

Guinigundo said a positive outlook means another upgrade may be given in the next 12 to 18 months.

"In fact there are many higher-rated jurisdictions in Asia but we enjoy a lower debt spread and lower CDS (credit default swap) spread which means the market already priced in a possible upgrade... It can also be a recognition that risks are much lower in the Philippines because of the good macroeconomic fundamentals," he said.

In 2013, the Philippine economy grew by 7.2%, one of the fastest in the region.