Fitch rating upgrade seen

IF ALL GOES WELL, the Philippines will soon be unanimously rated two notches above junk by the world’s three credit agencies, following Fitch Ratings’ more optimistic assessment on the country this week.

Everyone has reason to cheer, economic managers said. Not only do higher credit ratings reflect the economy’s improved standing, but could also bring down the cost of money in the country.

For consumers, this means friendlier loan rates from banks, making new cars and homes more affordable and credit card bills slightly easier to pay. For businesses, lower interest rates mean bankrolling the expansion of operations will be cheaper.

“While a positive credit-rating action

seems abstract to most, its benefits are felt in the most concrete terms,” Finance Secretary Cesar. V. Purisima said in a statement.

“Businesses are able to borrow more easily and everyday Filipinos find better home and car loans, for example,” he said.

On Thursday, Fitch Ratings revised its outlook for the Philippines to “positive” from “stable,” signaling its intention to grant an upgrade within the next 12 to 18 months.

Fitch currently rates the Philippines a notch above “junk.” Moody’s Investor Service and Standard & Poor’s grade the Philippines a notch above Fitch’s rating.

The new outlook followed the country’s ability to consistently outperform its neighbors, which either have similar or higher ratings, over the past three years, Fitch said.

Purisima said he still considered the Philippines “underrated,” but welcomed Fitch’s move as a “move in the right direction.”

Sovereign credit ratings, which are indications of the government’s ability to repay obligations, are used by investors as proxies for the strength and stability of the local economy.

Editha Martin, executive director of the Investor Relations Office (IRO), stressed the need to preserve beyond 2016 the gains in good governance to avoid a deterioration in the country’s much improved creditworthiness.

“It is everyone’s responsibility to ensure that good governance is preserved, or even enhanced, beyond the term of the current administration,” she said.