Fitch upgrades credit ratings of 2 local banks

FITCH RATINGS has upgraded the credit ratings of Bank of the Philippine Islands and state-owned Development Bank of the Philippines, expressing optimism on the capability of the two financial institutions to remain sound and stable.

In the case of BPI, Fitch raised the rating for the bank’s long-term, foreign currency-denominated debts from two notches to just one notch below investment grade, or from BB to BB+.

BPI’s rating for its long-term, peso-denominated debts was increased from a notch below investment grade to investment grade, or from BB+ to BBB-.

Fitch assigned a “stable” outlook to BPI’s ratings, which means it will remain the same for at least one year.

In the case of DBP, Fitch raised the rating for the bank’s long-term, foreign currency-denominated debts from two notches to just a notch below investment grade, or from BB to BB+.

The rating for DBP’s long-term, peso-denominated debts remained at a notch below investment grade, or BB+.

DBP’s ratings were also given a “stable” outlook.

Rating for foreign debt indicates an institution’s perceived ability to pay its liabilities denominated in foreign currencies. On the other hand, rating for local debt shows perceived ability to pay debts denominated in local currency.

The move of Fitch to upgrade the ratings of BPI and DBP came a day after it announced the upgrade of the Philippine government’s ratings by a notch.

The government’s foreign debt rating with Fitch is now just a notch below investment grade, or BB+, while that for its local debt rating is now at investment grade of BBB-.

Fitch cited the country’s improving economy and budget situation for the upgrade of the sovereign rating.