Monetary Board official: PHL may get credit rating upgrade in Q1 2013
There are two good reasons why the Philippines will likely get an investment grade credit rating in early 2013, a monetary official said Tuesday.
The Philippines may get an investment grade by early 2013, according to projection by.
One is the country’s sound macroeconomic fundamentals and positive perception by the international capital market, economist and Monetary Board member Felipe Medalla told a convention of Thrift banks, where he was the keynote speaker.
“We should be getting an investment grade, hopefully early next year,” Medalla said.
The other reason is interest rates.
Philippine bonds carry lower yields than bonds of peers with similar credit ratings, an indication that credit rating agencies are behind the international capital markets in assessing the country’s creditworthiness, Medalla said.
Philippine foreign exchange reserves reached a record of over $80 million as of end-August, the economist noted, saying that level of reserves gives Bangko Sentral the flexibility to cushion the impact of capital flight by foreign investors fleeing from emerging markets.
Bangko Sentral could also used its reserves to shield the peso from sharp declines, thus keeping the foreign exchange stable if need be. “The Philippines is practically invulnerable to capital flow reversals,” Medalla said.
Moody’s Investor Service has given the Philippines a credit rating of two notches below investment grade, while Fitch Ratings and Standard & Poor’s assessed the country’s creditworthiness just a notch under investment grade. — VS, GMA News