MANILA, Philippines — The government is ramping up efforts to address outstanding issues that would allow the Philippines to obtain the much coveted “A” rating from international credit raters.
In a press conference, Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said a working group co-chaired by the central bank and the Department of Finance (DOF) are now addressing the issues raised by debt watchers including the current account (CA) position, per capita income and secrecy of bank deposits.
“We need the support of all the government agencies so that we can address all the outstanding issues raised by the different credit rating agencies,” Guinigundo said.
He said debt watchers have awarded an investment grade rating to the Philippines, allowing the government as well as the private sector to borrow at a lower cost in the international debt market.
Guinigundo said the Philippines recently bagged a credit rating upgrade from S&P to BBB+ or two notches above minimum investment grade or a notch below the much coveted “A” rating.
Likewise, Japan Credit Rating Agency (JCRA) upgraded the country’s outlook to positive from stable on a BBB+ rating.
On the other hand, Fitch Ratings and Moody’s Investors Service have affirmed their BBB and Baa2 ratings, respectively, for the Philippines. Both ratings are one notch above the minimum investment grade.
“What we want is, for the next 18 months, that we’re able to address all the issues raised, including per capita income, the current account, including those issues pertaining to secrecy of bank deposits. Once these are addressed probably we can expect some kind of an upgrade in the next 18 months,” Guinigundo said.
The Philippines borrows heavily from both the offshore and debt markets as it continues to spend more than the revenues it raises.
It recently raised P19 billion after it returned to the Chinese debt market through the issuance of three-year panda bonds. The bonds were priced at 3.58 percent, which allowed the government to achieve a tight spread of 32 basis points above the benchmark.
“If you recall we raised funds through the panda bond market. And they gave us 32 basis points. A bond that is given 32-basis points above the benchmark is actually triple A,” Guinigundo said.