Moody’s reviewing PH possible upgrade

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Moody’s Investors Service on Thursday said that it is placing the Philippines under review for possible investment upgrade.

“Moody’s Investors Service has placed the Ba1 foreign and local currency long-term issuer and bond ratings of the Government of the Philippines on review for upgrade,” it said.

Moody’s stated that on July 23, a rating committee was called to discuss the rating of the Philippines.

It said that the one of the main points raised during the discussion were the country’s economic fundamentals, including its economic strength, which materially increased by 6.8 percent in 2012 as measured by gross domestic product (GDP).


Also, the ratings agency said that other key drivers for the review were the stable and favorable government funding conditions; improving fiscal and debt dynamics; and the political stability and a strengthened government policy mandate.

“The review will focus on the sustainability of the above factors and the relative strength of underlying credit metrics compared to investment-grade peers in the Baa rating range,” it said.

To date, credit-ratings agency such as Fitch Ratings, Standard and Poor’s and Japan Credit Rating Agency Ltd. have raised the Philippines to an investment grade status.

Furthermore, Moody’s also placed the Bangko Sentral ng Pilipinas (BSP) on review for upgrade in terms of foreign currency shelf rating and the ratings for the liabilities.

“Since Moody’s last rating action on 29 October 2012, the Philippines’ economic performance has exceeded Moody’s expectations; supporting the view that the economy will grow significantly faster than similarly rated peers over at least the next two to three years,” it said.

The ratings agency added that there have been no strong signs of overheating or a buildup in macroeconomic imbalances in the Philippines, despite having the highest gross domestic product growth in the Asia Pacific and emerging markets.

It cited inflation, for instance, is well-anchored at a low rate and close to the bottom of the BSP’s target range of between 3-percent and 5-percent range, adding that the current account is solidly in surplus, and asset price developments are relatively benign.

Moody’s also noted that improvements in the investment climate could further bolster the Philippines’ economic prospects, while addressing revenue weaknesses.

“An analysis of this issuer, relative to its peers, indicates that a repositioning of its rating would be appropriate,” it added.

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