Moody's finally gives PH investment grade rating
PH bags investment grade status from 3 debt watchers in 5 mths
MANILA, Philippines - (2ND UPDATE) The Philippines earned its third investment-grade upgrade in about five months on Thursday after Moody's raised the country's sovereign debt rating by a notch to Baa3, a widely expected move that will further boost the country's allure among foreign investors.
Moody's said the decision to lift the country's credit rating and revise the outlook to positive from stable was based on the sustainability of the country's robust economic performance, fiscal and debt consolidation, as well as political stability and improved governance.
"Clearly, Moody's has acknowledged the strong upside potentials and the constructive dynamics of the economy that should enable it to ride out the volatilities in global financial markets," central bank Governor Amando Tetangco told reporters in a mobile text message.
"This development should bode well for more investments, both local and foreign in the country," Tetangco said.
The Southeast Asian economy has been growing at a solid pace in the past few quarters, keeping pace with China, with the two becoming the region's fastest growing nations this year.
Moody's said the prospect of the U.S. Federal Reserve's tapering of its bond-buying stimulus had a muted effect on the country's financing conditions.
"An underlying shift in the government's funding profile has contributed to the country's resilience to such external financial shocks," the rating agency said in a statement.
"The government's improved ability to fund itself onshore reflects both the country's healthy external payments position and the ample liquidity in its banking system, which is also the only system worldwide deemed by Moody's to have a positive outlook," Moody's added.
PHILIPPINES BEATS INDONESIA
Before the rating upgrades, Philippine officials had complained that rating agencies were slower than financial markets to acknowledge the country's improved fundamentals.
The country's first investment grade upgrade from Fitch came in March, or months after that of its regional neighbour Indonesia, which has yet to get an investment grade rating from all three major debt watchers unlike the Philippines.
Philippines bonds were trading about half a point to a point higher although there was some profit-taking on upticks, with the Moody's announcement not entirely unexpected.
"The timing may have surprised some people given that they just downgraded Brazil's outlook this morning, a reflection of the current environment," said a Hong-Kong based trader with a U.S. bank.
"That they got to a clear IG ahead of Indonesia was long factored by the market," he said referring to the widening gap between the credit spreads of the two sovereign borrowers.
Philippines 2031 bond traded up at 131, higher by a point, although the more liquid 2037s were steady.
After the upgrade, the peso firmed to 43.13 per dollar from its open of 43.22. It is down almost 5 percent so far this year, but has been spared the sharp falls suffered in recent months by some of its peers in emerging markets, including Indonesia.
The Philippines was the only country in East and Southeast Asia whose growth forecast was revised up by the Asian Development Bank on Wednesday. It is expected to grow 7 percent this year against an April forecast of 6 percent.