Phl primed for investment grade status – S&P

MANILA, Philippines - Credit outlooks of debt watcher Standard & Poor’s Ratings Services (S&P) serve as “good indicators” of future credit rating actions, a new report said, bolstering optimism the Philippines is on its way to investment grade status.

“Since we began assigning outlooks in 1989, we have never lowered a sovereign rating with a positive outlook,” S&P said in the report titled “Outlooks: The Sovereign Credit Weathervane” released yesterday.

Until last year, a total of 168 countries, equivalent to 71 percent of total, had their positive outlooks upgraded, the report said. It took 13 months, on average, for an upward revision to be secured.

The Philippines was among those nations, with its latest upgrade last July happening eight months after a positive outlook was assigned by S&P. Hopes are high a new upgrade is forthcoming after the credit rater, in December, turned positive on the country’s BB+ rating.

If realized, that would make S&P the first agency to rate the Philippines under investment grade status. The Aquino administration targets to achieve the rating this year to lower debt interest payments and attract more foreign investments.

“We expect investment grade this year,” central bank deputy governor Diwa Guinigundo told reporters last Friday.

According to the report, upgrade on countries where S&P had a positive forecast mostly took place six to 18 months after such outlook was assigned. China had the longest amount of time to notch a revision, while Korea enjoyed the shortest.

In the same manner, rating actions on “stable” countries were limited, with 61 percent of 508 nations with such outlook merely retaining their present standings. Only 158 were revised to positive, while 103 jumped to an upgrade instantly.

As for those under negative watch, 162 of 282 nations under this category experienced a downgrade within seven months, the report said. That figure corresponds to 57 percent of total.

Investment-grade nations with positive outlook also enjoyed more upgrades than their speculative counterparts, S&P said. The former had 76 percent versus the latter’s 67 percent.

“Standard & Poor’s rating outlooks are intended to indicate our view of the potential direction of a long term credit rating, typically over six months to two years for investment-grade ratings...and six months to one year for speculative-grade ratings,” the report explained.