Fitch Ratings upgrade bodes well for PH global bond issue

The recent move by Fitch Ratings to upgrade the Philippines’ long-term foreign currency rating augurs well for the Philippines’ next global bond offering and provides an endorsement of the Duterte administration’s economic strategy, ranking officials said.

National Treasurer Rosalia B. de Leon welcomed the credit ratings upgrade by debt-watcher Fitch Ratings, which recently assigned a “stable” outlook on the Philippines, as the government prepares the country’s next global bond offering in early next year.

“We welcome this latest favorable action from Fitch, which is a resounding testament to the country’s sustained strong economic fundamentals and favorable growth trajectory,” De Leon said in a statement.

“This augurs well for our next global bond offering even as the market has priced our bonds much tighter than our ratings,” she added.

The treasury chief said the primary focus of the Duterte administration’s economic team is “on delivering results to create more jobs and improve the lives of our people.”

Finance Undersecretary Gil S. Beltran, for his part, said the upgrade was the result of a stronger public sector finance outlook for the Philippines “brought about by improved tax administration and the expected passage of tax reforms, along with a prudent monetary policy.”

“Also, we have unveiled a ‘Build, Build, Build’ infrastructure program, sectoral reforms and a list of Ease of Doing Business programs that will enhance the competitiveness of domestic industries and boost gross domestic product growth to 7 to 8 percent in the medium term,” Beltran said.

Fitch’s upgrade of the Philippines’ credit rating was the first since March 2013. Its rating for the Philippines is now at par with those of S&P Global Ratings and Moody’s Investor Service.

Finance Secretary Carlos G. Dominguez III said earlier that numerous international banking institutions, including European banks, have expressed interest in the Philippines’ planned 1 billion dollar-denominated global bond float early next year.

Deputy Treasurer Erwin Sta. Ana also said that both banks and potential investors have been providing positive feedback on the planned Republic of the Philippines (ROP) bond issuance.

According to the Treasury, the government plans to borrow R888.227 billion in 2018, with 20 percent or R176.269 billion of the amount sourced from foreign markets.

Dominguez said that, "We are pleased that Fitch is finally convinced that the Philippine economy now is much stronger and more resilient than in 2013, when they granted the Philippines its first investment grade credit rating of BBB.”