PH chances of credit upgrade dimmer—S&P

MANILA, Philippines—The Philippines’ chances of securing an investment grade from Standard & Poor’s over the near term just got slimmer as the worsening crisis in the eurozone threatened to spill over and affect emerging economies in the Asia-Pacific.

In its latest report, S&P said that the rise in credit rating enjoyed by the Philippines and some of its neighbors might not last long because of the eurozone crisis and its effects on financial markets worldwide.

In July, S&P raised the credit rating of the Philippines to a notch below investment grade, citing favorable fundamentals of the country.

The eurozone is one of the biggest export markets and is a source of foreign direct investments for the Philippines and its neighbors. The crisis-torn economies in the West also accommodate many Asian migrant workers, whose remittances help fuel household consumption in their home countries.

But S&P said in its report that it would “not expect the positive trend of rating changes to continue in the coming 12-18 months.”

“Economic conditions in the developed world and elsewhere remain weak and uncertain,” it added.

The credit watchdog will not rule out the possibility of a rating upgrade for some Asian economies, but such a development is remote at this time, S&P said.

The crisis in the eurozone has gripped nations and businesses suffering from huge debts and liquidity problems. Although the European Central Bank and European policymakers have been implementing measures to address the crisis, these have so far fallen short of what many economists believe are needed to end the problem.