Moody’s upgrade seen next month

MANILA, Philippines - Following good appraisals, Moody’s Investors Service could finally upgrade the country’s credit rating as early as next month, an economist of a global bank said.

“We continue to anticipate that Moody’s credit rating upgrade will come through in the third quarter of 2013 or as early as July,” Citi economist Jun Trinidad said in a research note.

While the upgrade may be deemed “rather late” by investors, Trinidad said it could still be “supportive of an upbeat fundamental outlook.”

The New York-based debt watcher has held off from raising the Philippines to investment grade rating despite rivals Fitch Ratings and Standard & Poor’s (S&P) Ratings Services granting that coveted status.

Fitch and S&P now rate the country ‘BBB’, with a ‘stable outlook,’ following succeeding upgrades in March and May. Moody’s put the country one level below that, at Baa1, although with a positive outlook that suggests an upgrade soon.

Moody’s said the recently reported 7.8 percent first quarter growth and record budget surplus of P36.803 billion are “credit positive” that could impact on its evaluation of the Philippines.

In his commentary released June 4, Trinidad said Moody’s long-awaited upgrade may be one of the “signals,” together with strong growth and central bank action, which the market awaits to reverse a recent plunge in the financial markets.

The Philippine Stock Exchange index, one of the world’s best performers, has lost more than a tenth of its value in just about 20 days since it last peaked on May 15. It recovered yesterday, adding 51.12 points to 6,609.010.

Meanwhile, yields of Treasury bills (T-bills) rose by more than 60 basis points on its last auction last Monday. This has reflected in the secondary market, where investors have charged higher on the sale of their bonds.

 â€œThe market may be waiting for other signals to conclude that the long end of the peso bond curve has entered oversold territory,” Trinidad pointed out.

 â€œAll that’s missing is Moody’s announcement of an investment credit rating upgrade to follow Fitch and S&P,” he added.