The Philippines has secured another investment grade status, this time from a Korean rating agency National Information and Credit Evaluation (NICE) Ratings Inc., the government’s Investor Relations Office (IRO) announced.
In a statement, the IRO said yesterday that the latest rating action by NICE Ratings is anchored on its assessment that the Philippines is seen poised to sustain the nation’s economic gains it has achieved over the last few years.
For the first time, NICE placed the Philippines in the investment status, raising the country’s long-term, foreign-currency rating by a notch from junk to the minimum investment grade of BBB-, with a “positive” outlook, indicating probability of another upgrade within the short term.
“The outlook is positive. It reflects the improved growth potential backed by institutional reforms and greater investment in infrastructure,” NICE Ratings said in its latest report on the Philippines.
The South Korean institution’s decision joins other major international ratings agencies Fitch Ratings, Japan Credit Rating Agency, Moody’s Investors Service, R&I, and Standard & Poor’s in saying the Philippines is an investment grade nation.
Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. and Finance Secretary Cesar V. Purisima both said the NICE Ratings upgrade signalled the country’s economic strengths, which have become difficult to ignore by the international community.
Purisima said this vote of confidence acknowledges efforts to ensure the country is able to sustain improvements in the economy over the long haul.
“As far as the BSP is concerned, the latest investment grade is another acknowledgment of efforts to maintain an inflation environment and a financial system conducive for business and supportive of sustainable growth,” Tetangco said.
NICE Ratings expressed belief in the ability of the Philippines, which grew by 6 percent in the first semester, to sustain robust economic growth, citing government efforts to boost the manufacturing sector and to invest heavily in infrastructure.
“In order to break away from the private consumption-led growth and pursue a new growth model jointly led by investment and consumption, the government promoted manufacturing while making it a priority to enhance public governance and infrastructure,” it said.
Manufacturing, said to have a high multiplier effect on the economy, grew by an average of 7.9 percent from 2010 to 2013. This outpaced the 6.7-percent growth for the services sector, NICE Ratings cited.
It also highlighted the government’s infrastructure-development agenda, under which public spending for infrastructure is targeted to grow from an equivalent of 3 percent of gross domestic product (GDP) this year to 4 percent next year and 5 percent in 2016.
Meantime, NICE Ratings likewise credited the Philippines for its strong external liquidity, stable financial markets, and much improved fiscal situation.
“In the face of the sell-off of financial assets in emerging markets since May 2013, the Philippines’ financial market remained relatively stable, thanks to the strong current account position and abundant liquidity in the financial market,” it said.
NICE Ratings said debt management was sound, with the central government’s outstanding debt having declined from a peak of 74.4 percent of GDP in 2004 to 49.2 percent last year.
It also said the BSP is properly managing inflation, citing recent adjustments in monetary policy setting and new regulations to prevent price bubbles in the real estate sector.
Prior to this upgrade, the last credit-rating action from NICE Rating was done in February 2013 when it adjusted its outlook on the previous rating of BB+ from “stable” to “positive.”
source: Manila Bulletin
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