Moody’s upgrades credit rating of Napocor, 6 other PH firmsBy Michelle V. Remo
Philippine Daily Inquirer
MANILA, Philippines—Moody’s Investors Service upgraded the credit ratings of several large private and government firms in the country, saying factors that led to the improved credit standing of the Philippine government have the same positive impact on the financial performance of the companies.
In separate statements issued late Monday and early Tuesday, the international credit watchdog said it raised the credit ratings of the state-owned National Power Corp. (Napocor), Power Sector Assets and Liabilities Management Corp. (PSALM) and Land Bank of the Philippines.
It also said it raised the credit scores of private firms Philippine Long Distance Telephone Co. (PLDT), Banco de Oro Universal Bank, Bank of the Philippine Islands and Metropolitan Bank & Trust Co.
The credit ratings of all the companies mentioned—except PLDT—were raised from Ba2 to Ba1, or from two notches to just one notch below investment grade.
PLDT’s credit rating was raised from Baa3 to Baa2, or from the minimum investment grade to one notch above the minimum.
Moody’s said the upgrades for the companies were all in line with the increase in the credit rating of the Philippine government.
Last Monday, Moody’s raised the Philippine government’s credit rating from Ba2 to Ba1, citing favorable growth of the domestic economy among others factors, which would directly or indirectly affect creditworthiness.
An economy that is growing robustly should help improve tax collection of the government, thereby increasing its ability to service its obligations.
For companies, a favorable performance of the economy means rise in incomes of households that in turn leads to increased consumption of goods and services and, therefore, higher profits.
In the first semester, the Philippine economy grew by 6.1 percent from a year ago, thus registering one of the fastest growth rates during the period. This came while advanced economies are confronted with problems, with the euro zone suffering a recession.
Moody’s also cited favorable macroeconomic factors, such as low inflation and rising remittances from overseas-based Filipinos.
Low inflation is seen to allow individuals to consume more, and to encourage firms to purchase capital and invest more to boost earnings.
The higher credit ratings of the government and the companies in the Philippines are expected to allow them to borrow funds, such as via sale of bonds in the international capital market, at lower costs.
The Philippine government expects to get an investment grade by 2013.
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