MANILA, Philippines - Moody's Investor's Service on Thursday upgraded the Philippines' credit rating to Baa3, becoming the last major credit rater to give the country an investment grade rating.
Moody's cited the sustainability of the country's robust economic performance, ongoing fiscal and debt consolidation, and political stability and improved governance as reasons for the upgrade. The rating comes with a positive outlook for the Philippines.
"In addition, the stability of the Philippines' funding conditions- during the recent bout of market volatility in emerging markets- points to the country's relative lack of vulnerability to external financial shocks, such as those arising from anticipated tapering by the (United States) Federal Reserve of its quantitative easing policy," the credit rater added.
Moody's likewise upgraded the government's foreign currency shelf rating to (P)Baa3 and the Bangko Sentral ng Pilipinas' liabilities have also been assigned a Baa3 rating and a positive outlook.
According to Moody's, "obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics."
The Philippines was previously rated Ba1, the highest mark in the junk grade status.
Fitch Ratings and Standard & Poor's Ratings Services, two major credit raters, have already given the country an investment grade rating.
“This is the 17th positive ratings action since President Aquino took office. We are now investment grade in all three major ratings agencies. Despite this, we are still among the most underrated countries since the market rates us at least two notches above investment grade. We will continue to work on strengthening and institutionalizing the reforms so we can sustain this beyond President Aquino's term," Finance Secretary Cesar Purisima said.
Purisima added that in line with good governance initiatives, the government has instituted reforms at the Bureau of Customs that President Aquino described as a 'reset button' for the agency.
"We have appointed five new Deputy Commissioners for the Bureau who will be able to work from clean slates and build trust in an agency that has long been saddled by corruption.This and our other good governance reforms have been acknowledged not just by credit rating agencies, but by organizations such as the World Economic Forum, who ranked us 59th in the latest edition of the Global Competitiveness Report, a jump from 87th place in 2009," he said.
An investment grade status translates to lower debt interest payments, opening up more credit avenues and luring more foreign investments to the Philippines.