INTERNATIONAL credit ratings firm Standard & Poor’s (S&P) has put Philippine Long Distance Telephone Co. (PLDT), the country’s most valuable firm, on positive ratings watch, indicating the chance for an upgrade in the next 12 to 18 months.
This follows a similar move on the Philippines’ sovereign rating, which is on the verge of being declared “investment grade” for the first time in the country’s history.
S&P also affirmed PLDT’s foreign currency and senior unsecured rating of BBB- and the Asean regional scale rating of axA- which are considered investment grade.
PLDT is the only Filipino corporation rated at investment grade, one notch higher than the Philippines’ sovereign rating.
“This affirms that the company is in the right direction as it evolves into a multimedia services group that is fully prepared for the screen age,” said PLDT chair Manuel V. Pangilinan.
He said the group’s recent decision to sell 80 percent of its shares in leading Filipino business process outsourcing (BPO) firm SPi Global would further strengthen PLDT’s finances and improve its cash flow.
For his part, PLDT president and CEO Napoleon Nazareno said the completion of the two-year P67-billion network modernization program puts PLDT far ahead of competition in terms of service reliability, speed, and efficiency, improving its position as industry leader.
This enables PLDT to lower its capital expenditures to its normal level of about 17 to 18 percent of revenues.
PLDT has the distinction of being the first and still only Philippine corporate to be given investment grade credit ratings by all three major international credit watchers—S&P, Moody’s Investors Service, and Fitch Ratings.
“The rating reflects the company’s strong position in the domestic market, diversified services, integrated network, and solid cash flow measures,” S&P said in a statement.
In its statement after raising its outlook for the Philippines, S&P said it would “raise the country’s debt rating next year depending on improvements in government revenue structure, a continued diminished reliance on foreign currency government debt financing, or a lower government debt burden.”
“We may also raise the ratings if institutional and structural reforms lead to improved investment environment, and thus better growth potential,” the credit watcher added.