Standard and Poor’s Ratings Services (S&P) has kept its credit score on the Philippines, and is likely to stay at that level in the next six months at the least.
In a statement, S&P said it affirmed the Philippines’ ‘BBB’ long-term foreign currency rating, and assigned a stable outlook, which means the current score stays for the next six months to a year.
According to S&P, its move was driven by the country’s strong external position amid rising foreign exchange reserves and a smaller foreign debt burden.
Remittances by overseas Filipino workers (OFWs) and revenue from the business process outsourcing (BPO) industry have propped up the country’s external payments position. A recovering U.S. economy also has fueled exports growth, lending further support to the Philippines.
The Philippines is rated a notch above the minimum investment grade by both S&P and Moody’s at 'BBB' and 'Baa2', respectively. Fitch however has kept the Philippines at the minimum investment grade of 'BBB-'.
In a statement, government officials said the Philippines is aiming to hit the “A” rating over the medium term.
“Fundamentals of the Philippines significantly improved over the last few years. With the trend staying positive, additional upgrades in the credit ratings over the medium term should be achievable,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.
“On the part of the BSP, efforts to further improve the regulatory environment for financial institutions, maintain price stability, and strengthen external payments position would be its contributions to placing the economy on an even higher gear,” Tetangco said.
Finance Secretary Cesar Purisima said a credit rating in the “A” category should be attainable, especially since the Philippines still remains underrated if one would compare the country’s credit ratings with how the market prices Philippine debt papers.
“If compared with those of other emerging markets, fundamentals of the Philippines are one of the strongest. And with continually improving major credit indicators, including debt manageability, credit ratings ideally should adjust accordingly,” Purisima said.
“Throughout the past five years of pursuing initiatives toward good governance, we have managed to outperform even our own targets and expectations. Moving forward, we expect to sustain the reform momentum and to raise the bar even higher,” he added.
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