Credit assessment system outdated, says DoF

Finance Secretary Cesar Purisima on Wednesday said credit-rating agencies should update their methods for assessing a country’s credit rating to better reflect capital-market opinions.

Purisima said that methods used by international credit rating agencies—Fitch Ratings, Moody’s Investors Service and Standard & Poor’s—were passé.

“It is important that methodologies used by credit-rating agencies adapt to the developments in the markets,” Purisima said Wednesday in a speech delivered during one of the sessions of the 45th annual meeting of the board of governors of the Asian Development Bank (ADB).

Purisima said current credit ratings of the Philippines are about four notches lower than the country’s creditworthiness as perceived by the international capital market.

“This makes us (the Philippines) the most underrated country in the world,” he said.

However, Jennifer Elliott of Moody’s, who was one of the speakers during the same session, said having various methods for assessing a country’s creditworthiness is normal and healthy.

“Harmonization (of methods for assessing creditworthiness) may be useful, but it is not necessary. The whole point actually is having different opinions so investors can have more bases in making decisions,” said Elliott, managing director and Asia-Pacific region head of Moody’s.