Moody’s: PH firms may retain credit standing

MANILA, Philippines—Moody’s Investors Service said corporate sectors in selected Asia-Pacific countries, including the Philippines, would mostly keep their relatively favorable credit ratings throughout the year despite a host of factors still threatening the global economy.

In its latest report, Moody’s said factors that may drag profitability of corporate entities in the region come together with those that are believed to keep them financially healthy.

Dampening factors include accelerating inflation and rising interest rates that could temper growth in demand, the credit-rating firm said. These may be offset by trends on improving operations and management of capital.

As of the end of the first quarter, 83 percent of corporate entities had been assigned “stable” outlooks, while only 12 percent received “negative” outlooks, Moody’s reported. The remaining 5 percent are assigned “positive” outlook.

A “positive” outlook indicates probability of an upgrade in the credit rating within the short term, while “negative” points to probability of a credit-rating downgrade. A “stable” outlook means existing credit rating is likely to remain the same.

In the Philippines, state-owned National Power Corp. and Power Sector Assets and Liabilities Management Corp. (PSALM) are some of those assigned “positive” outlooks on their ratings.

The power firms are given Ba3 ratings—three notches below investment grade.

The positive outlook for the two state-run companies is consistent with what Moody’s had assigned to the Philippine government, which enjoyed an improvement in outlook, from “stable” to “positive” in January.

Since Napocor and PSALM are state-owned firms, their debts are guaranteed by the national government.

The revised outlook took into account the country’s growing economy and its rising reserves of foreign currencies, boosting its capability to settle its liabilities with bond investors and other foreign creditors, Moody’s earlier said.

Inflation has been cited as one of the pressing challenges confronting the corporate sector this year, as upward pressures on global oil prices remain.

In times of accelerating increase in the prices of goods and services, economists said, consumers tend to focus their purchases on basic goods and tend to shy away from buying non-essentials.

Rising interest rates are also cited as a drag to businesses this year, as these would make bank loans more costly.

Despite the challenges, there is a consensus among economists that Asia-Pacific countries will still lead this year’s global economic growth. Industrialized countries are expected to continue posting only moderate growth rates.