Philippine conglomerates operating in critical sectors like real estate, power, energy, and telecommunications are facing heightened financial strain from the strengthening United States (US) dollar, which threatens to inflate the cost of their foreign-denominated debt.

The brewing corporate vulnerability follows a sharp 10.5 percent depreciation of the peso against the greenback since 2025, according to a report by Moody’s Ratings.

The credit rating agency attributed the regional currency slide to broader geopolitical headwinds and macroeconomic shifts. Moody’s noted in a commentary published Monday, June 8, that currency depreciation across South and Southeast Asia intensified through 2025 and 2026, accelerated by conflicts in the Middle East, subsequent oil-price shocks, new US trade tariffs, and an accelerating flight of foreign capital.

For domestic companies that rely heavily on overseas borrowing, this heightened volatility translates directly into costlier debt-servicing requirements and inflated principal repayments.

Moody’s highlighted cross-border conglomerate First Pacific Co. Ltd. as a primary example of this foreign-exchange exposure. First Pacific relies on a steady stream of dividend inflows from its core operating subsidiaries in Indonesia and the Philippines, including PLDT Inc. and Metro Pacific Investments Corp.

Because these operating units generate their revenue locally in pesos and rupiah, the domestic currency depreciation diminishes the holding company’s capacity to meet its obligations. When local earnings are converted, they yield significantly weaker US dollar cash flows. At the corporate level, First Pacific holds a 38.3 billion peso ($1.5 billion) debt burden that is entirely denominated in US dollars.

Similar structural foreign-exchange risks loom over the information and communications technology sector, though some players have managed to mitigate the fallout.

PLDT currently holds 14 percent of its total debt in US dollars. However, through aggressive hedging strategy and financial management, the telecommunications giant has successfully insulated its balance sheet, lowering its unhedged dollar exposure to just 5 percent of its overall debt portfolio.

Conversely, the aviation sector remains starkly exposed. Philippine Airlines Inc. (PAL) carries an estimated ₱45.9 billion ($1.8 billion) dollar-denominated debt load, a figure that includes ₱35.7 billion ($1.4 billion) in aircraft lease liabilities.

The flag carrier’s operational margins are simultaneously squeezed by jet fuel prices. Fuel accounts for nearly a third of the airline's total operational expenses and must be paid for in US dollars, yet the company does not currently hedge its fuel procurement costs.

Despite these headwinds, the airline maintains a series of built-in structural defenses. Moody’s pointed out that more than one-third of PAL’s revenue is collected directly in US dollars. When factoring in global bank settlement arrangements, the carrier's effective dollar-linked revenue rises to approximately 45 percent of total income.

Furthermore, the airline maintains a highly liquid defensive position, holding more than three-quarters of its ₱15.1 billion ($591 million) cash reserves in US dollars as of the first quarter of 2026.