Japanese agency raises PH credit rating to ‘BBB+’

Published February 7, 2020, 12:00 AM

by manilabulletin_admin


Japan-based Rating and Investment Information, Inc. (R&I) has upgraded the Philippines’ credit rating by a notch, from “BBB” to “BBB+,” bolstering the country’s momentum toward the Republic’s goal of securing single “A” rating by 2022.

The “BBB+” rating is just a step away from the minimum score within the sought-after “A” scale. The new rating was also assigned a “stable” outlook, which indicates the absence of factors that may cause the rating to change within the short term.

Favorable assessment from Japanese credit rating agencies like R&I has become more important for the Philippines in recent years, given the government’s successive issuances of Samurai bonds in the Japanese market as part of the strategy to diversify sources of financing. Two of the country’s top economic officials responded favorably to the rating upgrade.

Finance Secretary Carlos Dominguez III said, “We welcome the credit rating upgrade from R&I that, in our view, was overdue in light of the positive trends under the Duterte administration that have deepened investor confidence in the Philippine economy.”

“Declining poverty incidence and a lower unemployment rate, massive investments in infrastructure and human capital development have resulted in consistently high growth and more jobs,” Dominguez said.

“A series of socioeconomic reforms in Congress intended to achieve greater economic inclusion have impressed upon the international business community the unwavering commitment of President Duterte to sustain the growth momentum and improve the lives of our people,” he added.

Given that a sovereign credit rating is an assessment of a country’s ability and willingness to pay debts on time and in full, Dominguez said, “the Philippines’ strong macroeconomic fundamentals plus the Duterte administration’s aggressive investment strategy, while maintaining fiscal discipline, show that we deserve the higher rating.”

He added that “credit rating upgrades will not only benefit the government and private sector investors through lower borrowing rates when they invest in projects for economic expansion, but will also mean ordinary Filipinos will subsequently pay lower interest rates on their loans. All of these will translate into larger investments and more opportunities for Filipino workers.”

“Higher credit ratings also upgrade everyone’s life,” he added.

For his part, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the upgrade from R&I keeps the Philippines on course toward the “Road to A” agenda, a government interagency initiative for which the BSP’s Investor Relations Office serves as Secretariat.

“Given significant improvements in the country’s macroeconomic conditions, which are made possible in part by a favorable inflation environment and a sound financial system, hitting an A-scale rating from R&I and the other debt watchers within the next two years is achievable. But of course, we can never be complacent. This is an all-of-government undertaking. On the part of the BSP, we will continue to adhere to the sound conduct of monetary policy and banking supervision. We will also vigorously pursue our additional mandates of supervising the country’s payments and settlements system and spearhead efforts to ensure a stable financial system.”