The Philippines has secured another credit rating upgrade, this time from South Korean-based NICE Investors Service that cited governance reforms and an intensified infrastructure development campaign.
The country’s rating was raised a notch from the minimum investment grade of BBB- to BBB. NICE said this was anchored on “improved government transparency as well as [an]enhanced environment backed by expanded infrastructure and social overhead capital in the form of public-private partnerships.”
The rating was assigned a “stable” outlook.
Compared with its peers, NICE said the Philippines was seen as more resilient to shocks, including the impact of a slowing Chinese economy and market volatility arising from higher interest rates in the United States.
“Considering its trade structure and strong FX [foreign exchange]liquidity, the impact of global economic uncertainties . . . will be manageable,” it said.
The debt watcher expects the Philippines to sustain robust economic growth of 6.3 percent over the short and medium term.
Economic officials welcomed the upgrade, which marks the 24th positive rating action for the Philippines since 2010.
“The string of favorable actions from credit rating agencies resonates the process of economic strengthening that the Philippines has undergone over the years,” central bank Governor Amando Tetangco Jr. said.
Contributing to this are forward-looking monetary policy, proactive bank supervision and prudent external accounts management, which Tetangco said played crucial roles in promoting a stable inflation environment and a strong financial system.
Finance Secretary Cesar Purisima, meanwhile, said: “Virtuous cycles result from dogged discipline, even when political headwinds seem too strong. Expanded fiscal space has opened up a Pandora’s box of opportunities in infrastructure, allowing us to play a fast game of catch-up with our neighbors.”
Purisima noted that with the latest upgrade, Fitch Ratings remains the only agency that assigns the minimum investment grade to the Philippines.
Fitch scores the country a notch lower at BBB-. Last September, the debt watcher 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.
The Philippines is currently rated a notch above minimum investment grade by both Standard and Poor’s and Moody’s Investors Service at BBB and Baa2, respectively.
Investor Relations Office Executive Director Editha Martin said the upgrades provided concrete benefits for the economy, including improved business confidence and reduced borrowing costs for the government.
The latter has contributed to lower commercial lending rates for consumers and businesses as well, fueling consumption and investments, she added.