Philippines gets another rating upgrade

MANILA, Philippines - Seoul-based debt watcher NICE Investors Service has upgraded the credit rating of the Philippines, allowing the country to tightly secure a place within the investment-grade territory.

In a statement, NICE upgraded the credit rating of the Philippines by a notch to BBB or a step above investment grade from the minimum investment grade of BBB- amid the country’s governance reforms and intensified campaign for infrastructure development.

The Philippines has received investment grading ratings from Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings.

The Korean debt watcher said the upgrade was anchored on “improved government transparency as well as enhanced environment backed by expanded infrastructure and social overhead capitals in the form of public-private partnerships.”

The upgrade came amid sustained rise in infrastructure investments as the Aquino administration has raised its infrastructure budget to five percent of gross domestic product this year from 1.8 percent of GDP in 2010.

Likewise, the rating agency cited the award of several infrastructure projects under the public private partnership (PPP) scheme worth $4.8 billion since 2010, making the Philippines one of the most active infrastructure markets in Southeast Asia.

The Philippines’ new credit rating with NICE is assigned a “stable” outlook, indicating it may stay the same at least over the short term despite challenges posed by external developments.

Compared with peers, NICE said, the Philippines is seen to be more resilient to shocks, including the impact of a slowing Chinese economy and market volatility arising from higher interest rates in the US.

“Considering its trade structure and strong foreign exchange liquidity, the impact of global economic uncertainties such as slowdown of the Chinese economy and US interest rate hike will be manageable,” NICE said.

The credit watchdog expects the Philippines to sustain a robust economic growth of 6.3 percent over the short and medium term.

Economic officials welcomed the latest credit-rating upgrade, which marks the 24th positive rating action for the Philippines under the Aquino administration.

BSP Governor Amando Tetangco Jr. said the string of favorable actions from credit rating agencies resonates the process of economic strengthening that the Philippines has undergone over the years

“Contributory to this process were forward-looking monetary policy, proactive bank supervision, and prudent external accounts management, which have played crucial roles in promoting a stable inflation environment and a strong financial system,” Tetangco said.

“Virtuous cycles result from dogged discipline, even when political headwinds seem too strong. Expanded fiscal space has opened up a Pandora’s box of opportunities in infrastructure, allowing us to play a fast game of catch-up with our neighbors,” Finance Secretary Cesar Purisima said.

“With increased transparency, we have empowered citizens who participate in the process of governance, and who – having known the gains reforms can bring – will refuse to roll back progress,” Purisima said.

With this latest credit rating action from NICE, the finance chief said Fitch remains the only agency that assigns the minimum investment grade to the Philippines.

Editha Martin, executive director of the Investor Relations Office, said upgrades in credit ratings have provided concrete benefits for the economy, including improved business confidence and reduced borrowing cost for the government.

The latter has contributed to lower commercial lending rates for consumers and businesses as well, thus fueling consumption and investments.