Poll results’ impact on ratings not immediate – Fitch

MANILA, Philippines – The outcome of the 2016 Philippine elections on Monday, May 9, will not have an immediate impact on the country’s minimum investment grade credit rating and stable outlook, according to Fitch Ratings.

Sagarika Chandra, an associate director of Fitch Ratings’ Sovereigns team, said the Philippines’ underlying economic fundamentals is still a strength due to its strong net external creditor position, declining general government debt and deficit levels, and positive growth momentum.

“The agency does not expect the outcome of the Philippines election to have any immediate impact on the rating or outlook,” said Chandra, who also mentioned that the aforementioned factors led Fitch to reassert the country’s rating at “BBB-“ with a positive outlook in April.

Chandra also added that Fitch is observing whether the improved governance standards that took place during the Aquino administration beginning in 2010 can be maintained after the 2016 elections, along with rating sensitivities.

“If that were to occur, it could be positive for ratings,” Chandra said. “Fitch will monitor further developments closely.”

Davao City Mayor Rodrigo Duterte of the PDP-Laban party is poised to become the country’s next president. His closest opponents, Senator Grace Poe and former interior secretary Manuel “Mar” Roxas II, have already conceded defeat to Duterte.

The vice presidential race, meanwhile, is still tight with administration candidate Leni Robredo holding a slim lead over Ferdinand Marcos Jr.

The Philippines’ ratings with other agencies are higher than the one given by Fitch’s: Baa2 with Moody’s Investors Service; BBB with Standard & Poor’s, NICE Ratings, and R&I; and BBB+ with Japan Credit Rating Agency.

Fitch also expects economic growth in the Philippines to continue, with gross domestic product (GDP) growth to average around 6% in 2016-2017 from 5.9% between 2011 and 2015.

There were some concerns about the impact of a Duterte presidency on the economy, as he did not present a detailed economic plan to business leaders in the few times he spoke before them as a candidate.

Before the polls, some analysts reported that the Davao City mayor’s vague economic plans and threats to kill thousands of criminals are spooking the financial market.

But following the release of unofficial election results showing him enjoying a huge lead over other candidates, local businessmen and industry leaders threw their support for him, and bared their wish list to him, in terms of reforms and his possible Cabinet members. – Rappler.com