Philippines Now Investment Grade

From Phil.Star March 28 by Prinz magtulis

Noy on first-ever rating: Asia’s laggard taking off

MANILA, Philippines - What it means for Phl: An investment grade rating means the Philippines has a strong ability to meet its financial commitments fully and on time.

While credit ratings do not indicate investment merit, credit risk is one of the factors taken into consideration by businessmen. An investment grade sends a message that the Philippines is a safe place for investments, including big-ticket ones that generate much-needed employment.

Borrowing costs will also go down for debtor nations seen as unlikely to default. The Philippines, whose debt payments eat up the largest chunk of the annual national budget, can then channel savings to development efforts and improvement of basic services.

More investments, more jobs, and more funds for social services are expected after the country bagged yesterday its first-ever investment grade rating.

Debt watcher Fitch Ratings lifted the country’s credit rating to BBB- from BB+, with a stable outlook, less than a month after its team visited the Philippines for a diligence review of the country’s macro fundamentals.

New York-based Fitch made the move ahead of its rivals Moody’s Investors Service and Standard & Poor’s Ratings Service.

Both agencies put the Philippines one notch below the coveted status, with S&P having a “positive” outlook.

President Aquino welcomed the credit upgrade yesterday, saying it represented the “reclamation of our national pride” and showed that “the perennial laggard of Asia is taking off.”

“This means much more than lower interest rates on our debt and more investors buying our securities,” Aquino said in a statement. “Greater access to low-cost funds gives us more fiscal space to sustain and further improve on social protection, defense, and economic stimulus, among others.”

He said more investments and jobs would foster “a virtuous cycle of growth, empowerment, and inclusiveness that will redound to the benefit of Filipinos across all sectors of society.”