Moody's reviewing four PHL banks, two govt firms for credit rating upgrade

Following an announcement that Philippine sovereign ratings are now under review, Moody's Investors Service revealed that four banks, a utility and the state firm in-charge of selling power assets are also being scrutinized for a possible credit rating upgrade to the coveted investment grade.

 

In separate statements Thursday and Friday, Moody's bared that six corporations whose local and foreign currency deposit ratings are at Ba1 or one notch below investment grade are under review:

A higher credit rating will gives these companies enough leeway to borrow money at lower costs. 

 

Moody's is the only debt-watcher left of three top global agencies still having a one notch below investment grade rating for the Philippines , after the country received coveted status from Fitch Ratings and Standard & Poor’s

On Thursday, the debt-watcher said Philippine sovereign ratings were under review for a possible upgrade to investment grade. 

 

Moody's review of the banks—expected to conclude over the next three months—will include an  assessment of their respective market share of deposits and loans as well as their role in the payment system. 

 

“The review for upgrade of BDO's, BPI's, LBP's and MBT's ratings reflect our assessment that these ratings would likely benefit from an additional notch of systemic support uplift in the event that the parallel review of the Philippine sovereign debt rating concludes with a rating upgrade,” Simon Chen, Assistant Vice President and Lead Analyst for Philippine banks at Moody's, said in a statement. 

 

Moody's will also take into account the systemic importance of each bank, which would influence  government's willingness to extend support in times of stress.

 

The two state-run corporations are being reviewed given their status as government-owned with the Philippine government. 

 

“PSALM's ratings are underpinned by its distinct policy role and its close integration with the government," Mic Kang, Vice President and Senior Analyst at Moody's, said in a separate statement. 

 

PSALM restructure and reform the Philippine power sector, and as such its debts are guaranteed by the government. 

 

Meanwhile, NP's “senior unsecured bond rating reflects the Philippine government's unconditional and irrevocable guarantee for NPC's rated long-term bonds,” Kang noted. — VS, GMA News