Credit raters affirm investment grade rating for Phl
Internatonal credit rating agencies have affirmed the investment grade rating of the Philippines as the fastest growing economy in the region. S&P Global Ratings has affirmed the Philippines’ investment credit rating with a stable outlook, backed by the country’s robust postpandemic economic growth and strong external position.
The New York-based debt watcher retained its BBB+ or two notches above minimum investment grade rating of the Philippines.
The outlook on the longterm rating was also stable, reflecting expectations that the economic recovery would be sustained and fiscal deficits may decline over the next two years.
In its Global Credit Outlook 2024 titled “New Risks, New Playbook,” S&P sees the gross domestic product (GDP) growth of the Philippines accelerating to 6.4 percent this year from the projected 5.4 percent in 2023.
This is a tad lower than the 6.5 to 7.5 percent target set by the Cabinetlevel Development Budget Coordination Committee (DBCC).
On the other hand, Fitch Ratings sees the Philippine economy growing above six percent over the medium term, enough to affirm the country’s investment grade BBB credit rating and stable outlook.
The debt watcher said the rosy outlook was supported by large investments in infrastructure and reforms to foster trade and investment, including through publicprivate partnership.
“We forecast real GDP growth of above six percent over the medium term, considerably stronger than the BBB median of three percent,” Fitch said.
A rating of BBB sits above the minimum investment grade and suggests that expectations of default risk are low. It also indicates the ability of the country to meet its financial commitments.
The credit rating agency revised the Philippines’ credit rating outlook to stable from negative in May 2023, meaning Fitch is not likely to change its rating over a one- to two-year period.
Fitch’s latest decision recognizes the Philippines’ strong medium-term growth prospects, gradually declining debt, macroeconomic stability and sound economic policies.
In September 2022, Moody’s Investors Service affirmed its Baa2 rating – a notch above minimum investment grade - and stable outlook for the Philippines as the challenging global credit conditions are not expected to derail the country’s recovery from the impact of the COVID-19 pandemic.
Moody’s sees the Philippine economy growing above six percent for 2023 and 2024 despite the aggressive rate hikes delivered by the Bangko Sentral ng Pilipinas (BSP) to tame inflation and stabilize the peso that slumped to a record low of 59 to $1 in October 2022.
“We forecast that the Philippines’ GDP will grow 6.2 percent annually in 2023 to 2024. While this marks a slowdown from 7.3 percent in 2022, the Philippines’ growth rate will remain one of the highest in Asia, supported by strong growth in domestic consumption. The lagged impact of rate hikes as well as subdued capital investment by the private sector are key risks to the country’s economic growth,” Moody’s said.