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MANILA, Phillippines – Standard & Poor’s Ratings Services (S&P) upgraded the credit rating of dominant carrier Philippine Long Distance Telephone Co. (PLDT) a notch higher than the sovereign, which had just won an investment level rating from the international debt watcher for the first time.
S&P upgraded PLDT’s foreign currency corporate credit rating and unsecured credit rating to ‘BBB’ or one notch above investment grade, from ‘BBB-‘ or investment grade. The outlook is ‘stable’.
PLDT’s ASEAN regional scale rating was also improved from ‘aXA-‘ to ‘aXA’, also one notch above the sovereign rating.
S&P on Thursday, May 2, upgraded the sovereign’s rating to BBB-, marking the second investment grade rating for the Philippines. In March, Fitch Ratings was the first to deliver an investment grade rating for the Philippines, as well as an upgrade to a notch above the sovereign’s for PLDT.
“The rating reflects the company’s strong position in the domestic market, diversified services, integrated network, and solid cash flow measures,” S&P said in a statement.
However, S&P noted that that “the country and macroeconomic risk of the Philippines and intense competition in the mature domestic cellular market temper these strengths.”
In a statement, PLDT chairman Manuel V. Pangilinan welcomed S&P’s upgrade and said PLDT would continue to benefit from the continued improvement of the economic conditions of the Philippines.
“We are pleased to benefit from the improving economic conditions in the country that resulted in another investment grade rating for the Philippines,” Pangilinan said.
He added that the ratings upgrade should better reflect the potential of PLDT, which is capped by the sovereign ratings.
PLDT was the first Philippine company to be granted investment grade credit ratings by all 3 major international credit watchers -– New York-based S&P, London-based Fitch Ratings, and New York-based Moody’s Investors Services.
PLDT president Napoleon Nazareno said the upgrade reaffirms the soundness of PLDT’s business strategy to transform into a fully integrated telco operator offering a complete suite of advanced communications services.
The telco giant has an over 60% market share in the cellular, broadband and fixed line businesses. Its net income jumped 12% to P35.5 billion in 2012. – Rappler.com
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