Recto still sets sights on 'A' credit rating by 2028
Finance chief says Marcos admin will 'try' to achieve that status
Finance Secretary Ralph G. Recto said the government is keeping its ambitious target of achieving an "A" credit rating before the end of the Marcos administration.
Although the president is still early in his term, Recto is optimistic on the country's prospects for climbing the rating ladder, with expectations of receiving a "positive" outlook from Moody’s Investors Service in the near future.
Recto has confirmed that the economic managers met last Tuesday, Feb. 27, with representatives from Moody’s, one of the three major international credit rating agencies.
After the meeting, Recto told Manila Bulletin that the discussions “went well,” and he is hoping for “a positive outlook” from the New York-based debt watcher.
Moody’s has maintained the Philippines’ “Baa2” rating since September 2022, which is one notch above the minimum investment grade, with a "stable" outlook.
A positive outlook on the credit rating suggests an increased probability of a rating upgrade for the Philippines in the future.
“I think the meeting went well. I am hoping we get a positive outlook,” Recto said. “Our borrowing cost is trading as investment grade. That seems to be market consensus.”
In order to advance the country's "Road to A Credit Rating Agenda," a favorable revision of the rating outlook is necessary.
To recall, the Inter-Agency Committee on the Road to A Credit Rating Agenda, also known as "IAC on the Road to A," was created in 2019 by the Duterte administration.
Former Finance Secretary Benjamin E. Diokno had said the IAC's primary function was to efficiently coordinate the efforts of member agencies in developing, implementing, and overseeing the execution of the Road to A Roadmap.
Member agencies of the committee include the Bangko Sentral ng Pilipinas, Department of Finance, National Economic and Development Authority, Department of Budget and Management, Department of Trade and Industry, and Department of Transportation.
Recto now said they are working towards the "Road to A Roadmap" goal, saying “we will try to achieve that status.”
Under the plan, the Philippines should secure an investor-grade sovereign credit rating of "A" from one of the major rating agencies, including Moody’s, Fitch Ratings, S&P Global Ratings, Japan Credit Rating Agency, and Rating and Investment Information.
At present, Fitch assigns the Philippines a “BBB” rating, placing it between the minimum investment grade of "BB" and the minimum A-level rating of "A."
Likewise, S&P Global rates the country at “BBB”, which is two notches above the minimum investment grade but falls one notch short of the A-level ratings category.
Lastly, Moody’s assessment of the Philippines stands two notches below the A-level threshold of "A."
Earning an "A" credit rating will make it much cheaper for the country to borrow money, attract more investment, build more trust with investors, boost the country’s reputation, further stabilize the local economy, and strengthen the peso.