Philippines credit rating now one notch under investment-grade
With Indonesia on track to achieve investment-grade credit rating by the end of 2011, it’s time to look at another large Southeast Asian economy looking to follow suit. The Philippines Department of Finance is confident the country can achieve the same investment-class rating by 2013, after a budget surplus and government measures to reduce spending.
Fitch Ratings raised the Philippines long-term foreign currency bond rating from BB to BB+, one step below investment grade, while Moody’s Investors Service raised its rating on foreign and local currency bonds from Ba3 to Ba2. Philippines Finance Secretary Cesar V. Purisima said it was a historic fourth positive action on the country’s credit rating since the Aquino administration began 11 months ago.
Higher credit ratings lower the price of debt, allowing the government to borrow more efficiently to finance infrastructure and other projects. Investment grade also opens the doors to large institutional investors (such as pension funds) from wealthy countries, who are often blocked by law or internal rules from investing in anything below the grade.
The new administration has an agenda to improve the Philippines financial image abroad with initiatives to cut spending, combat corruption and promote fiscal sustainability. The central bank, Bangko Sentral ng Pilipinas, has also promised to play its part in keeping prices stable, maintaining growth and insuring against external shocks through sound monetary policy.
source & article: mb.com.ph
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