Philippine credit rating seen to improve
The Philippines stands a good chance of getting another upgrade in its credit rating over the next six to 12 months due to the improving capacity of the country to service its debts, the HSBC said.
During a briefing, HSBC’s Arjuna Mahendran said the Philippines could be next in line to Indonesia, which recently acquired investment-grade status after its credit rating was upgraded.
Indonesia secured an investment grade from Fitch last December, while Moody’s Investors Service assigned the same rating to the country this month.
“Indonesia got a rating upgrade; it may take six months to a year before the Philippines also sees its credit rating upgraded given favorable indicators,” said Mahendran, HSBC’s managing director and head of investment strategy for Asia.
The Philippines is currently rated one to two notches below investment grade. The country’s economic officials are vying for an investment-grade status by 2013 or earlier.
Mahendran said factors that caught the attention of credit-rating firms included declining debt ratios and sustained rise in remittances, boosting the country’s foreign exchange reserves.
The country’s gross international reserves are at an all-time high of about $76 billion.
The Bangko Sentral ng Pilipinas earlier said the amount would be enough to cover about 11 months of the country’s usual imports.
Credit-rating firms, particularly Moody’s and Fitch, acknowledged the Philippines’ improving credit profile in their decision last year to upgrade the country’s rating.
Nonetheless, they said the Philippines would need to further improve its fiscal standing, such as by enhancing tax collection, and continue to reduce the size of its debt so that the country could achieve investment-grade status.
