Investor confidence on Rody watch noted
THE TIGHT spreads of the Philippines’ offshore bond issuances and its credit rating upgrade to its highest ever rate of ‘BBB+’ in 2019 underline the deepening investor confidence following the game-changing reforms carried out by President Duterte to further energize the economy and spread its benefits across all sectors, including marginalized Filipinos.
Standard & Poor’s (S&P) announced last April its upgrade of the Philippines’ long-term credit rating from ‘BBB’ to ‘BBB+’, which is just a notch away from the coveted “A” rating.
This latest upgrade has put the Philippines above countries like Italy and Portugal and just a step below countries like Spain and Malaysia. It also placed the Philippines on the par with countries like Mexico, Peru and Thailand.
Such a vote of confidence from one of the world’s most reputable credit rating agencies is a recognition of “President Duterte’s unwavering commitment to bold reforms and sound economic policies as embodied in the 10-point Socioeconomic Agenda of the administration and his strong political will to get these tough initiatives done at the soonest possible time,” Finance Secretary Carlos Dominguez III said.
“These socioeconomic reforms being put in place by President Duterte are meant to sustain the growth momentum, attract investments, create jobs and spell a decent life for every Filipino,” he said.
National Treasurer Rosalia De Leon pointed out that “the upgrade is a recognition of our sound policies on liability management. We have kept our debt in check—even as we invest more in infrastructure and social services. We are committed to fiscal discipline, and this makes the Philippines a truly creditworthy sovereign in the eyes of the international financial community.”
S&P attributed the improvement in the Philippines’ rating to “its “above-average economic growth, a healthy external position, and sustainable public finance.”
It said the stable outlook on the rating, “reflects our view that the Philippine economy will maintain its momentum over the medium term, in combination with contained fiscal deficits and stable public indebtedness.”
The higher ‘BBB+’ rating tells investors that it is safe to do business in the Philippines and that the country is highly capable of paying its debts, Dominguez said. “This enables the country to borrow at lower costs, and spend the money it saves to bankroll its priority programs such as infrastructure, education and health care.”