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Credit agencies under pressure to raise PH grade


The country’s long wait for an investment grade may soon be over as credit agencies are seen to be giving in to pressure to align their ratings on the Philippines with the favorable assessment of the international capital market.

According to international financial services firm Australia and New Zealand Banking Group Ltd. (ANZ), there is a disconnect between the country’s actual credit ratings, as assigned by credit agencies, and the favorable interest rates on Philippine bonds assigned by investors in the international capital market.

In a paper on the Philippine economy, ANZ said rating firms should no longer ignore the fact that their ratings on the country are not being observed by the international capital market and, therefore, they must raise the country’s sovereign grade in the near term.

The Philippines is rated a notch below investment grade by Fitch Ratings, and two notches below investment grade by Moody’s Investors Service and Standard & Poor’s.

ANZ cited that the interest rates of bonds issued by the Philippine government are as low as those of debt instruments issued by countries with investment grade.

Based on ANZ’s estimates, interest rates on Philippine bonds are priced 200 basis points below the rates carried by bonds from countries with the same credit ratings as the Philippines.

“The market has been pricing the Philippines’ sovereign risk at investment grade for an extended period of time,” the foreign financial institution said.

“Barring unforeseen policy or political setbacks, we conclude that a near-term agency rerating is more likely than a prolonged disconnect between the Philippines’ risk spreads and its sovereign rating.”

The institution said the Philippines deserves better credit ratings, citing the significant reduction in the government’s debt burden and the substantial increase in its foreign exchange reserves.

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Tags: Business , capital market , Philippines , Ratings

  • http://joboni96.myopenid.com/ joboni96

    kailangan nilang gawin yan
    wala ng pag investsan sa u.s. at e.u.
    krisis na doon

    dito naman sa atin
    gagawa ng krisis
    kung tatanga tanga tayo

  • http://pulse.yahoo.com/_IAQLUSKZ7TH4C2FHOD7SLQONQ4 bong

    PH should be in Investment Grade.   This thing does not resonate well to ordinary Filipinos esp. those who know nothing how the financial world works.  

    A higher credit rating means PH can borrow funds to support infra projects, expansion at a lower rate.   In return,  local banks will lend money to the borrowers at lower rate,  so the effect is tremendous – increase in economic activities and more liquidity in the market. 

    It’s about time that the Philippines regain its former glory… I hope.

    • http://www.facebook.com/katipunan Andres Bonifacio

      Former Glory? When did the Philippines ever become investment grade…NEVER! Tell your boss to work harder please and stop noynoying!

      • Handiong

        Never? It is now. As the ANZ Bank’s paper has said, investors in the international financial markets are ignoring the below-investment grade rating by the credit-rating agencies and has been pricing the Philippines’ sovereign risk at investment grade. The investors themselves are voting with their money.

  • dean eriol

    This should be the Philippine ratings:
    Fitch – BBB+ or even A-
    S&P – BBB+
    MOODY’S – BBB+

  • Ceazar

    Everybody is shouting “The economy, stupid!!!”.

    This looks like good news, pero it seems that nobody is much interested in reading and commenting on business news. O kaya people will only gleefully comment kapag ang balita ay tungkol sa politika or it  is bad news sa gobyerno.

    sobrang adik ang mga pilipino sa politics at sa intriga.

    • http://www.facebook.com/profile.php?id=100000006861021 Leonell Lopez Cawayan

      Nah. When you think about how the executive handles the economy, this is no interesting news. The worst is yet to come to the country unless the government does something to cure their ‘indecisiveness’ in planning ahead, the roadmap for the Philippine economy in the long-term.

    • http://profile.yahoo.com/KZF5TE7RCJJXEDQH4B6X3C47AI Carl

      Because it’s fluff. The bottom line is GDP growth, Employment Rate, Direct Foreign Investment.

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