S&P upgrades PLDT rating

MANILA, Philippines - New York-based Standard & Poor’s Ratings Services (S&P) has upgraded the credit rating of Philippine Long Distance Telephone Co. (PLDT) on the back of its dominance in the telecommunications industry as well as its strong cash flow.

The upgrade brought the credit rating of PLDT to “BBB+” or two notches above the minimum investment grade from ‘BBB’ or a notch above the minimum investment grade with a stable outlook.

“The rating on PLDT remains constrained by our BBB+ transfer and convertibility assessment on the Philippines. Our stand-alone credit profile for PLDT remains ‘a-’,” S&P said in a statement.

S&P upgraded the credit rating of the Philippines to “BBB” or a notch above the minimum investment grade from “BBB-“ or investment grade as the rating agency expects economic reforms to continue beyond the term of the Aquino administration.

The rating agency upgraded the Philippines ’ foreign long-term debt by one notch to BBB from BBB-, and foreign short-term debt to A-2 from A-3 on the back of a stable outlook.

S&P cited the position of the PLDT in the telecom industry as well as its financial performance.

“We believe PLDT benefits from its leading position in the domestic market, good business diversity, strong cash flows, and modest debt level. The intense competition in the mature domestic cellular market and large dividend payouts of almost 100 percent temper these strengths,” the agency said.

The PLDT Group has earned the distinction of being the first Philippine corporate to be given investment grade credit ratings by all three major international credit watchers – S&P, London-based Fitch Ratings, and New York-based Moody’s Investors Services.

PLDT chairman Manuel V. Pangilinan earlier said the company is confident of meeting its core net income guidance of P39.5 billion from P38.7 billion.

“Given the company’s performance in the first quarter of 2014 and the outlook for the rest of the year, I can say that PLDT is firmly back on the growth path, and on track to meet our core net income guidance of P39.5 billion this year for the full year 2014,” Pangilinan said.

PLDT’s net income amounted to P9.38 billion in the first quarter of the year two percent higher than the P9.18 billion booked in the same period last year as consolidated service revenues climbed three percent to P41.22 billion from P39.97 billion.