Moody’s Investors Service improved its outlook on the country’s four biggest banks from “stable” to “positive,” indicating a probability of better credit ratings in the near term given their generally sound financial performance.
The banks given a positive outlook included Bank of the Philippine Islands, Banco de Oro, Metropolitan Bank and Trust Co. and Land Bank of the Philippines.
A positive outlook means an existing credit rating may be upgraded within the short term if favorable trends are sustained.
Moody’s also revised its rating outlook for Philippine Long Distance Telephone Co. (PLDT) after the debt watcher signaled that the country’s sovereign debt was in for another upgrade. PLDT’s long-term foreign currency debt is currently rated at minimum investment grade or two notches higher than the Philippine sovereign counterpart.
BPI, BDO, Metrobank and Land Bank all have a rating of Ba2 for their foreign currency deposits (which reflect the ability to keep safe the foreign-currency denominated deposits entrusted to it) and their foreign currency senior unsecured debt (which reflects the ability to meet obligations to bond investors). A Ba2 rating is two notches below investment grade, similar to that of the national government.
Moody’s decision to improve its outlook on the four banks’ ability to service foreign currency-denominated liabilities came after it did the same for the Philippine government.
For BPI, however, Moody’s downgraded its local-currency deposit rating from Baa2 to Ba1 to make its rating closer to that of the national government. The former local-currency rating of BPI was two notches above investment grade, while the new one is a notch below investment grade.
The move to downgrade the local currency rating of BPI came following a recent general review by Moody’s of local-currency ratings of banks that had higher ratings than their respective governments.