Phl gets another rating upgrade

MANILA, Philippines - The Philippines has been awarded another investment grade rating, this time from Korean firm National Information and Credit Evaluation Ratings Inc. (NICE).

The credit rating raised the country’s long-term, foreign currency rating by a notch to BBB- with a positive outlook, which means further upgrade may be awarded in the short term.

“The rating upgrade reflects improved fiscal profile and growth potential, robust stability in the financial market and the external sector, and the government’s continuing efforts to improve governance and infrastructure,” NICE said in a statement.

The firm stressed that key factors considered for the rating included the strong economic growth of 7.2 percent achieved in 2013 although this is forecast to slow to six percent this year. NICE noted that the deceleration will be on the back of a “normal economic adjustment” as the growth momentum is seen being sustained.

The credit rating agency also pointed out the stability of Philippine financial markets despite global sell-offs of emerging market assets since May last year.

NICE said domestic markets are less vulnerable due to the country’s strong current account position and abundant liquidity levels.

“About the issue of real estate market overheating, which emerges due to the expansion of the construction industry and the rise in real estate prices, NICE expects it is under manageable level until now and the authorities are willing and able to contain it,” the debt watcher said.

NICE further said that the rating will be further supported if the country generates more investments as a result of improvements in its governance and infrastructure.

Rating constraints, meanwhile, include an overheating economy or when asset bubbles are formed especially in the real estate sector, NICE said.

Government officials yesterday said the credit rating upgrade reflects the economic gains the country is enjoying following structural reforms earlier put in place.

“As far as the BSP (Bangko Sentral ng PIlipinas) is concerned, the latest investment grade is another acknowledgement of efforts to maintain an inflation environment and a financial system conducive for business and supportive of sustainable growth,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. said.

Finance Secretary Cesar Purisima said “this vote of confidence acknowledges efforts to ensure the country is able to sustain improvements in the economy over the long haul.”

The Philippines enjoys investment grade ratings from the three biggest global debt watchers, Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s.

S&P in May awarded the country a BBB rating, a notch above the minimum investment grade of BBB-, with a stable outlook. Fitch ratings, meanwhile, affirmed the country’s BBB- rating in March with a stable outlook.

Moody’s in October last year gave the country an investment grade rating of Baa3 with a positive outlook.