A Chinese credit ratings agency has assigned a triple A rating to the Philippines, the Finance department said on Monday, with growth additionally expected to pick up this year given ongoing reforms and strong fundamentals.
China Lianhe Credit Rating Co., Ltd.’s upbeat assessment extended to Manila’s planned panda bond offering, which was also rated ‘AAA’.
Both scores came with stable outlooks, the Finance department said in a statement.
Lianhe was said to have noted gains in the implementation of the government’s 10-point socioeconomic agenda, including the implementation of the Tax Reform for Acceleration and Inclusion law that “will help the Philippines achieve more rapid and equitable economic growth in the following years”.
Gross domestic product (GDP) growth was forecast to hit 6.8 percent this year, up from 2017’s 6.7 percent but below the government’s 7.0-8.0 percent target.
The country’s strengths were said to lie in consistent growth, improving debt ratios, remittance flows, low external debt and growing revenues, among others.
The debt watcher also pointed out that unemployment and inflation were “well under control” and the banking system remained stable despite being constrained by underdeveloped infrastructure and low GDP per capita.
“The Republic of the Philippines has a well-established institutional framework, but its governance capacity is moderate albeit improving remarkably in recent years,” it also said.
“Additionally, China Lianhe Credit Rating Co., Ltd. also factors in the strengthened economic relations between the Philippines and China as well as the stable source of payment from growing government revenues.”
With regard to the planned 1.46-million panda bond offering, Lianhe said these “have the lowest expectation of default risk.”
The Finance department noted that the rating was based on the Philippines’ registration application for the bond float, proceeds from which would be added to the country’s foreign reserves.