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Another rating upgrade seen

Finance Secretary Cesar Purisima said Monday an international credit rating agency is set to upgrade the Philippines’ sovereign rating again in the coming weeks, confirming the country’s strong fundamentals.

He said the country had received 23 credit rating upgrades from different credit rating institutions such as Standard & Poor’s, Moody’s Investors Service and Fitch Ratings since 2010.

“I heard that in the next few weeks, there will be another upgrade coming up, bringing it to 24,” Purisima said in a speech during the celebration of the 67th anniversary of the Insurance Commission. He did not identify the credit rater.

Cesar Purisima

The country’s latest credit upgrade came in July last year, when Japan Credit Rating Agency raised the Philippines’ score to “BBB+” from “BBB”.  Standard & Poor’s maintained the country’s debt rating at “BBB” in April.

S&P assigned a “stable” outlook on the rating, or one notch above the minimum investment grade, and which was assigned to the Philippines in May last year.

The Finance Department said in terms of credit outlook, the 23rd upgrade the Philippines received was when Fitch Ratings lifted the outlook for the country to “positive” from “stabled” in September 2015.

Analysts said with the new “positive” outlook, the Fitch rating of “BBB-” for the Philippines, which is the minimum investment grade, was likely to be upgraded within the short term.

“Economic growth continues to outperform ‘BBB’-rated peers, and favorable demographics support the medium-term growth outlook,” Fitch said in a report.

Moody’s also has an investment-grade credit rating of “Baa2” on the Philippines, with a stable outlook.

Purisima said he was hopeful about the upcoming credit upgrade, given the country’s sound economic fundamentals.

“I’m always hoping. I’m just looking at the fundamentals [because] if you look at the fundamentals, the external position is very strong. The overall macro environment is strong. BPO [business process outsourcing] and remittances are strong,” Purisima said.

He said the outlook for the economy remained rosy, despite the quick slowdown in China.

“The issue right now that makes the market very jittery is China, but if you look at the correlation, of Philippine growth to China growth, we have the lowest correlation. That means we’re the least vulnerable in the region,” Purisima said.

“If you look at the fundamentals, even the corporate profits are strong. I believe that the Philippines is in a good position. On the Fed rate hike, again, we’re one of those considered to be the least vulnerable.  Our foreign debt to GDP ration has been going down.  Our [debt] interest as a percentage of our revenue and budget is going down.  Reliance on foreign borrowing is also down,” he said.

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