MANILA, July 4 Standard & Poor's Ratings
Services on Wednesday raised its credit rating on the
Philippines to one notch below investment grade, a move likely
to boost bonds and currency trades and further lift an equity
market that has hit new peaks this week.
The ratings move by S&P puts the country one rung below its
Southeast Asian neigbour Indonesia, which bagged investment
grade ratings from Fitch Ratings last year and Moody's Investors
Service early this year.
S&P said it upgraded the long-term sovereign credit rating
of the Philippines to BB plus from BB with a stable outlook,
citing improved fiscal flexibility and strong external position,
but said further rating improvements depends on Manila's ability
to raise income levels or sustain revenue reforms.
"The foreign currency rating upgrade reflects our assessment
of gradually easing fiscal vulnerability, as the government's
fiscal consolidation improves its debt profile and lowers its
interest burden," S&P said in a statement.
"The rating action also reflects the country's
strengthening external position, with remittances and an
expanding service export sector continuing to drive current
S&P said the country's high, although declining, interest
burden and weak revenues were rating constraints, along with
relatively high government foreign-currency debt at 42 percent
of the total.
The Philippines is one of several Southeast Asian countries
showing stronger signs of resilience to global turbulence than
the rest of Asia as buoyant domestic spending offsets struggling
Presidential press secretary Ricky Carandang said in a text
message to reporters that the ratings move affirmed the
government's fiscal management strategy.
"At a time when countries around the world are debating
austerity versus stimulus, we have had the fiscal space to
provide stimulus without weakening our fiscal position."
Finance secretary Cesar Purisima said in a text message to
reporters: "We can now clearly make our case for an investment
Manila wants to win its first investment grade rating before
President Benigno Aquino steps down from office in 2016 to lower
the country's borrowing costs and widen its base of potential
investors, as some funds have restrictions on holding sub
investment grade debt.