BALI, Indonesia, (PNA) — Moody’s Investor Services said Saturday the Philippines’ stable funding conditions was one of the reasons the global credit watchdog upgraded the country’s sovereign rating recently.
In an interview with the Philippine media delegation covering President Benigno S. Aquino III’s attendance to the 21st Asia Pacific Economic Cooperation (APEC) Summit here, Moody’s Senior Analyst Christian De Guzman said the Philippines’ ability to withstand the dreaded taper talk “point to the country’s relative lack of vulnerability to external financial shocks, such as those arising from the anticipated tapering by the US Federal Reserve of its quantitative easing policy.”
He said the Philippines’ ability to withstand this “stress test” have allowed financing conditions for both government and private sector to remain stable.
“Last Thursday (October 3), Moody’s upgraded the Philippines’ investment rating to Baa3 from Ba1 with a positive outlook citing the country’s high economic strength, moderate institutional and fiscal strengths and low susceptibility to event risks,” De Guzman said.
“We upgraded the Philippines to BAA3 with a positive outlook this Thursday and concludes a review that was announced on the 25th of July and during the review, we found that many of the trends that prompted the review remained intact namely: the sustainability of high growth, ongoing physical debt consolidation and lastly political stability,” he added.
“During this time over the past few months, we’ve also seen an important stress test that we believe the Philippines had passed very well and that was the taper-talk that plagued emerging markets and the Philippines’ financing conditions for both the government and private sector have remained stable throughout that period and that points to: decrease in vulnerability versus other emerging markets so we believe that the combination of all these factors justified the upgrade as well as the positive outlook,” De Guzman further said.
He said that a new credit rating may be given by Moody’s in the next 12 to 18 months.
“Usually, when we upgrade or downgrade it’s usually to a stable outlook. In this case, it wasn’t a stable outlook, (it was) a positive outlook signaling that over the next 12 to 18 months, there is a good chance that we may indeed move again to perhaps Baa2, which will put the Philippines ahead of its Baa3 peers in the region such as India or Indonesia,” De Guzman said.
Malacanang welcomed the credit upgrade saying the move was an affirmation of the continuing confidence of the international community in the fiscal management of the Aquino administration.
“The pleasant surprise was that we were also given a positive outlook; meaning, the prospects of another upgrade are quite positive as well,” Presidential Communications Development and Strategic Planning Office Secretary Ramon Carandang said in a press briefing on Thursday.
“This will have implications or has already had implications for our credit standing, but this sort of just formalizes it. It is a continuation of the confidence that the international community has in the fiscal management of President Aquino and his team.”