PNoy: We will work for investment grade status

Rappler.com
His makes the statement a day after global debt watch S&P upgraded the Philippines' rating to one notch below investment grade

MANILA, Philippines – President Aquino vows to work to attain the Philippines’ first investment grade rating.

“We can’t predict when that will happen… But we will work to achieve that,” Aquino told reporters on Thursday, July 5.

Aquino made the statement a day after international credit ratings agency Standard & Poor’s (S&P) raised the Philippines sovereign rating to a notch below investment grade due to the improvement in the country’s fiscal position and debt level.

The upgrade is the 8th positive action under the Aquino administration and the highest that the Philippines attained since 2003.

Better ratings will translate into lower borrowing costs for the country as lenders and investors are less likely to command high interest rates on debts to compensate for the risk of default.

While the country has not attained investment grade status yet, Aquino said it has actually enjoyed reasonable interest rates as banks already consider the Philippines “low risk.”

Budget Secretary Florencio Abad said S&P’s upgrade “bolsters our chances to meet or even surpass our fiscal consolidation targets.”

“It will also enable us to reduce the interest cost of our debt and swap our foreign currency-denominated credit into less volatile peso instruments. All these will help reduce the debt burden… create more fiscal space for social and economic services,” he said in a statement.

Aside from S&P, Fitch Ratings rates the Philippines one notch below investment grade.

Among major credit raters, only Moody’s Investors Service rates the Philippines two notches below investment grade.

S&P said any further upgrade on the rating will depend on improvements in the Philippines political and institutional factors or evidence of sustainable revenue growth.

Conversely, it said the rating may be lowered if “the government’s commitment to fiscal consolidation weakens.” – Rappler.com

 

 

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