Capital raising exercise to maximize lower borrowing costs

By Joann Santiago

Wednesday’s upgrade by Standard & Poor’s (S&P) made corporates more bullish of capital raising exercise to maximize lower borrowing costs.

Metro Pacific Investments Corp (MPIC) chief financial officer David Nicol dubbed the upgrade as “great news for the Philippines” since “it will lower both domestic and international borrowing costs and is positive for MPIC and other corporates.”

He declined to give specifics but said the company is “looking at several options just now.”

“Need to be clear that in so doing we would, net of break funding costs, be ahead on a net present value basis in terms of fixed rate debt,” he added.

Similarly, SM Investments Corp. chief financial officer Jose Sio said the upgrade is “good for both our country and for business.”

“This will increase liquidity and improve pricing of equity and debt market,” he said.

“SM is reviewing its various fund raising options and watching the market,” he added.

S&P upgraded the country’s ratings to ‘BB+’ with Stable outlook from ‘BB’ after noting the continued improvement in the country’s fiscal flexibility.

It also affirmed the domestic economy’s ‘BB+’ long-term local currency rating, the ‘B’ short-term sovereign credit ratings and the ‘axBBB+’/axA-2’ ASEAN scale ratings.

It, however, changed to ‘BBB-‘ from ‘BB+’ the country’s transfer and convertibility assessment (T&C).

“In our assessment, the Philippines’s fiscal flexibility is gradually increasing, reflecting an improving government debt profile and moderating interest burden,” the ratings agency said in a statement.

Aside from S&P, Fitch Ratings also gave the Philippines a ‘BB+’ long-term foreign currency issuer default rating (IDR) with stable outlook.

Among the major credit ratings agency, only Moody’s Investors Service gave the country a rating that is two notches away from investment grade at ‘Ba2.”

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