PH credit rating to be raised ‘in next few weeks’
The Philippines expects to soon receive a credit rating upgrade, a Cabinet official said on Monday, given continued governance improvements and strong macroeconomic fundamentals.
In a keynote speech during the 67th anniversary of the Insurance Commission on Monday, Finance Secretary Cesar Purisima said governance programs were able to inspire confidence from financial markets.
“For the financial market, it has allowed us to get into a virtuous cycle by allowing the Philippines to be recognized, allowing them to see the fundamentals and see through the noise that is always present in the Philippine political setting,” he said.
This, Purisima noted, made the Philippines the most upgraded sovereign in the world in the last five years with 23 positive credit rating upgrades.
“And I heard that in the next few weeks, there will be another upgrade coming up, bringing it to 24,” the Finance chief claimed.
The Philippines is currently rated a notch above minimum investment grade by both Standard and Poor’s (S&P) and Moody’s Investors Service at BBB and Baa2, respectively. Fitch Ratings, which is the most likely to announce a ratings upgrade, scores the country a notch lower at BBB-.
Fitch last September revised its outlook on the Philippines’ sovereign credit rating to positive from stable, citing a steady improvement in the country’s governance standards and competitiveness. It also recognized the economy’s strong growth and ability to confront external headwinds better than most emerging markets.
The debt watcher said the revised outlook meant the BBB- rating could be upgraded in the short term. S&P and Moodys, in contrast, both have a stable outlook for the Philippines,
which means their ratings are unlikely to change any time soon.
At the sidelines of the Insurance Commission event, Purisima told reporters that he was hopeful about the credit rating upgrade given the continued strength of the Philippines’ macroeconomic fundamentals.
“As I was expressing . . . we’ve had 23 [positive credit ratings action]and I am hoping for 24,” he said.
“If you look at the fundamentals, the external position is very strong. The overall macroeconomic environment is strong. BPO [business process outsourcing]and remittances are strong,” he added
Purisima also claimed the Philippines was the least vulnerable economy in the region with respect to the impact of a China slowdown and US Federal Reserve interest rate hikes.
“If you look at the correlation of Philippines growth to China growth, we have the lowest correlation. That means we are the least vulnerable among the regions. On the Fed rate hike, again, we are one of those considered to be the least vulnerable,” he said.