The Philippines achieved investment grade for the first time as Fitch Ratings raised its assessment, rewarding President Benigno Aquino for leading a growth resurgence after lagging its regional peers for decades.
The rating on the nation’s long-term foreign currency- denominated debt was raised one level to BBB- from BB+, Fitch said in a statement today. The outlook on the rating is stable.
“The Philippines’ sovereign external balance sheet is considered strong relative to A range peers, let alone BB and BBB category medians,” Fitch said, citing the net external creditor position.
An exit from so-called junk status bolsters Aquino’s drive to transform the nation into one of the region’s fastest-growing economies 15 years after the Asian financial crisis of 1997-98. The upgrade may also boost capital inflows and complicate the job of the central bank as it tries to rein in an appreciating peso and curb asset bubbles.
“Funds are already pouring into the Philippines and an investment grade is a further endorsement,” Eugene Leow, a Singapore-based economist at DBS Group Holdings Ltd., said before the report. “It allows a wider pool of investors to buy Philippine assets and there might be a slight bump up in inflows. The central bank has been sounding off on inflows and they could implement measures to deter speculative inflows.”
The Philippine Stock Exchange Index (PCOMP) surged to a record in March and the peso is trading near a five-year high.
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