Phl next in line for Moody's upgrade

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said it is confident of a similar credit rating upgrade for the Philippines after New York-based Moody’s Investors Service raised the credit rating of Indonesia.

BSP Governor Amando Tetangco Jr. said in a text message to reporters that the Philippines deserves a credit rating upgrade based on its sound macroeconomic fundamentals.

“I continue to believe economic and financial conditions in the Philippines make us deserving of an upgrade,” Tetangco stressed.

Just the other day, Moody’s upgraded Indonesia’s credit rating one notch to Baa3 or investment grade status with a stable outlook

HongKong and Shanghai Banking Corp. (HSBC)Asia head for investment strategy Arjuna Mahendran likewise told reporters that the Philippines is likely to get an investment grade upgrade within the next six months to one year.

“There is a strong possibility that (the Philippines) will get an upgrade. Immediately global managers of funds will increase their allocation and you will see much more money into your capital markets,” Mahendran stressed.

The Aquino government has so far received five credit rating and rating outlook upgrades from the three international rating agencies since assuming office in June 2010.

Just last month, Standard and Poor’s (S&P) upgraded the credit rating outlook of the Philippines to positive from stable, signalling a possible upward revision in the country’s credit rating over the next 12 months.

S&P raised the credit rating of the Philippines to two notches below investment grade from three notches last November 2010 on the back of the country’s rising external liquidity.

In January last year, Moody’s upgraded the country’s credit rating outlook to positive from stable, paving the way for the upgrade of the country’s credit rating to two notches below investment grade amid the gains made in fiscal consolidation, sustained macroeconomic stability, and robust external payment position.

This was immediately followed by London-based Fitch Ratings that upgraded the country’s sovereign rating to one notch from two notches below investment grade last June 23 on the back of the country’s strong economic growth, improving fiscal position as well as robust external payments position.

With the rating actions, Fitch rates the country’s sovereign credit at one notch below investment grade while Moody’s as well as S&P rate the country’s sovereign credit at two notches below investment grade.

The Philippines managed to post a 3.6 percent gross domestic product (GDP) growth in the first nine months last year amid a manageable inflation that averaged 4.4 percent based on 2000 prices.

The country’s GDP growth slackened to 3.2 percent in the third quarter of last year from 7.3 percent in the third quarter of 2010 due to weak global trade and underspending by the Aquino government.

Based on their assessment BSP Deputy Governor Diwa Guinigundo said the Philippines deserves an investment grade credit rating from the agencies.

“We deserve an investment grade based on our assessment,” he stressed.

According to him, the Philippines is rated three notches below comparable countries, including Indonesia, that has better infrastructure.

He explained that the Philippines achieved growth amid a low inflation environment as well as a strong external payments position and robust banking industry.