ASEAN KEY DESTINATIONS
Moody’s upgrades Philippines to ‘investment grade’
by Ron B. Lopez
The Philippines’ credit rating is now at ‘investment grade’ after Moody’s on Thursday upgraded the country’s rating from Ba1 to Baa3.
The credit-rating agency said the upgrade is due to the country’s robust and sustained economic performance as it “has entered a structural shift to higher growth, accompanied by low inflation.”
“Real GDP [Gross Domestic Product] expanded by 6.8 percent in 2012 and 7.6 percent year-on-year in the first half of 2013. These levels are among the fastest rates of growth in Asia-Pacific and across emerging markets globally. At the same time, CPI inflation remains well anchored and is currently below the central bank’s target range,” Moody’s said in a statement.
Moody’s has also upgraded the government’s foreign currency shelf rating to (P)Baa3 and the ratings for the liabilities of the country’s central bank, Bangko Sentral ng Pilipinas (BSP), to Baa3.
The Philippines’ credit rating and its foreign currency self rating are both assigned positive outlooks.
This has been the country’s third investment-grade scores from the top three credit rating agencies. Standard & Poor’s and Fitch Ratings have already upgraded its rating for the Philippines earlier this year.
Moody’s has also raised the Philippines’ long-term foreign currency (FC) bond ceiling to Baa1 from Baa2 as well as its long-term FC deposit ceiling to Baa3 from Ba1.
According to Moody’s, the “ongoing fiscal and debt consolidation and political stability and improved governance” have prompted it to review and upgrade its credit rating, which concludes its initial evaluation on 25 July 2013.
The country, according to Moody’s, will maintain a current account surplus, which has been strengthened by remittance inflows of the Overseas Filipino Workers (OFW) and services exports, particularly from the business process outsourcing sector or call center.
“These flows are likely to remain strong, if not strengthen, over the outlook horizon. The Philippines’ external strengths are reflected in the falling external debt to GDP ratio and the ample stock of gross international reserves, which now exceeds the country’s total external debt,” it said.
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