Phl due for new upgrade – BSP
Kathleen A. Martin (The Philippine Star) - March 12, 2014 - 12:00am

MANILA, Philippines - The Philippines may get a further credit rating upgrade as early as this year on the back of the economy’s rosy prospects, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said yesterday.

“Given that one of the credit rating agencies has given us a positive credit outlook and given that Fitch (Ratings) will also provide some positive review after they came here, it’s possible that we can have another upgrade,” Guinigundo said.

The Philippines enjoys investment grade ratings from the world’s three major credit rating agencies which all cited the strong growth achieved by the economy, improved governance, and structural reforms being put in place by the current administration.

Guinigundo said Fitch has already concluded its annual visit and assessment of the country last month. The other two rating agencies are expected to conduct their reviews within the first half of the year.

Fitch in March last year upgraded the country’s credit rating to ‘BBB-’ with a stable outlook from junk, while Standard & Poor’s in May gave the Philippines a ‘BBB-’, also with a stable outlook.

Moody’s Investors, delivered its Baa3 in October with a positive outlook.

The positive outlook means another upgrade may be on the horizon for the country in the next 12 to 18 months, Guinigundo said.

Guinigundo said that the Philippines is deemed “better” than other similarly-rated or higher-rated countries in the region.

“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,” Guinigundo said.

“It can also be a recognition that risks are much lower in the Philippines because of the good macroeconomic fundamentals,” he added.

The economy expanded by 7.2 percent last year, while inflation averaged three percent. The country also boasts of a balance of payments surplus and a sound banking system.

“Our external to GDP (gross domestic product) ratio has also been coming down significantly in the last 10 years not only because the economy has expanded in the last 10 years but also because the national government has been prepaying its debts,” Guinigundo explained.

“Remember that in the past, this was the issue, the challenge of the Philippine economy – reducing the debt to GDP ratio,” he added.

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