Aquino: Fitch's upgrading of PHL status first time in history

March 27, 2013 11:41 pm 

MANILA, March 27 — President Benigno Aquino III announced Wednesday that Fitch Ratings has upgraded the status of the Philippines' Long-Term Foreign-Currency Issuer Default Rating to "BBB-" from "BB+".

"We are pleased to hear that this afternoon, the Fitch group announced that they upgraded the status of the Philippines from 'BB+' to 'BBB-'. This marks the first time in history that our nation has been granted investment grade status by a major credit ratings agency," the President said in a statement.

"This means much more than lower interest rates on our debt and more investors buying our securities," he noted.

President Aquino said that greater access to low-cost funds gives the country "more fiscal space to sustain and further improve on social protection, defense, and economic stimulus, among others."

He noted: "More companies in the real economy can now consider us an investment destination. Investment grade for sovereign debt should also lead to lower borrowing costs for Philippine companies in the international markets, consequently allowing for higher valuations for their securities.

"This in turn enables industries to expand and generate more jobs for our countrymen — fostering a virtuous cycle of growth, empowerment, and inclusiveness that will redound to the benefit of Filipinos across all sectors of society."

Fitch Ratings also upgraded the Country Ceiling to "BBB" from "BBB-" and the Short-Term Foreign-Currency IDR to "F3" from "B".

According to Fitch, the upgrade of Philippines' sovereign ratings reflects the country's sovereign external balance sheet, which is considered strong relative to "A" range peers, let alone "BB" and "BBB" category medians.

A persistent current account surplus, underpinned by remittance inflows, has led to the emergence of a net external creditor position worth 12 percent of GDP by end-2012, up from 6 percent at end-2010.

Remittance inflows were worth 8 percent of GDP in 2012 and proved resilient even through the shock of the global financial crisis, it noted.

Fitch expects a rising import bill stemming from strong domestic demand to lead to a narrower CAS and to stabilize the net external creditor position at a strong level through to 2014.

Fitch, in a statement, also attributed the upgrade in the Philippines' good economic performance, expanding 6.6 percent in 2012 amid a weak global economic backdrop.

"Strong domestic demand drove this outturn," it said.

Fitch expects the Philippines GDP growth of 5.5 percent in 2013.

President Aquino said the country's upgrade status "represents the perception of lessening risk in our markets," and "formalizes the investment grade level at which the Philippines has already been securing credit."

"This is an institutional affirmation of our good governance agenda — Sound fiscal management and integrity-based leadership has led to a resurgent economy in the face of uncertainties in the global arena. It serves to encourage even greater interest and investments in our country," he stressed.

The President said the upgrade is "one among many other positive developments that demonstrates the reclamation of our national pride."

"Truly, what was once known as the perennial laggard of Asia is taking off, and is accelerating towards its goal of an equitably progressive society," he said.

President Aquino said the task now is "to ensure that expected inflows will be used to maximum effect towards a sustainable, progressively empowering economy."

"We are determined to build on our economic gains to usher in a society wherein every Filipino, today and for generations to come, may be given the wherewithal to realize their full potential," he said. (PNA)

HBC/LGI

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