By Joann Santiago
Standard & Poor’s Ratings Services upgraded Friday the Philippines’ rating outlook to positive from stable after citing that the country susceptibility to negative external developments has ebbed.
The upgrade of the country’s rating outlook was done a day after Fitch Ratings upgraded to investment grade Indonesia’s credit rating.
Relatively, S&P also affirmed its foreign currency ‘BB’ long-term and ‘B’ short-term sovereign credit ratings and the local currency ‘BB+’ long-term and ‘B’ short-term sovereign credit ratings on the country.
It also affirmed the ‘axBBB+/axA-2’ ASEAN regional scale ratings on the sovereign, citing that “the recovery rating remains ‘3’, which denotes our expectation of a 50-70 percent recovery in the event of a distressed debt exchange or payment default. The transfer and convertibility assessment (T&C) is ‘BB+’.”
S&P credit analyst Agost Benard said the revision of the outlook “reflects our assessment that the Philippines’ external vulnerability has diminish.”
He said that they based their view “on the current external liquidity and net debt indicators against the Philippines’ relatively high public external debt, about 48 percent of which is on commercial terms.”
“We expect further rating improvements to be most likely driven by improvements in fiscal and debt credit metrics,” he said.
The ratings agency, in a statement, said the country’s ratings “encompass its relatively low income level, weak fiscal profile, and high, albeit improving, public debt and interest burden.”