Credit rating upgrade for PH likely as Moody’s revises outlook

MANILA, Philippines [UPDATED] – International debt watcher Moody’s Investor Service has revised its rating outlook for the Philippines to “positive” from “stable,” citing continued improvement in the country’s fiscal position.

“The government of the Philippines has continued to demonstrate prudence in fiscal management, as characterized by low budget deficits relative to its rating peers and a steadily declining level of debt relative to GDP (gross domestic product),” Moody’s said in a statement.

The revision in the outlook means an upgrade of the Philippines credit ratings is likely soon.

But Moody’s said the upgrade will depend on the country’s ability to further boost revenue collections and bring down its debt.

Reacting to Moody’s outlook change, Finance Secretary Cesar Purisima said: “This is one more step in our march towards investment grade, towards reducing the gap between the market rating and the credit rating, and more importantly towards a more sustainable growth path.”

“The Aquino administration will continue to focus on good governance as the basis for good economics, on fiscal sustainability, on macroeconomic stability and on opening up the country to business and tourism,” Purisima added.

Budget Secretary Florencio B. Abad highlighted that Moody’s recognized that government’s “expenditure restraint.”

“We reemphasize our commitment to continue our pursuit of urgent reforms to ensure not only prudence in spending, but also maximum impact for each peso spent by the government,” Abad said in a statement.

The Aquino administration is targeting to attain the Philippines’ first investment grade before its term ends in 2016. 

Moody’s rates the Philippines’ foreign and local currency bonds two notches below investment grade, the same as Standard & Poor’s rating. Another ratings agency, Fitch Ratings, rates the Philippines one notch below investment grade.

A better rating would translate to lower borrowings costs for the Philippines as investors are less likely to command high interest rates on debts to compensate for the risk of default. – Rappler.com