Philippine Peso Rises With Dollar Bonds on Moody’s Rating Boost

The Philippine peso rose by the most in a month and dollar bonds advanced after Moody’s Investors Service raised the nation’s credit rating, citing a decline in the government’s debt burden.

The peso strengthened 0.4 percent, the biggest gain in more than four weeks to 44.493 against the greenback in Manila, according to prices from Tullett Prebon Plc. That was the highest close since Sept. 24. The yield on the dollar notes due in 2034 dropped to a 19-month low.

Moody’s lifted the Philippines credit score to Baa2, the second-lowest investment-grade and on a par with Standard & Poor’s assessment. The key drivers for the decision included the debt reduction as a result of improvements in fiscal management, the outlook for strong economic growth and the nation’s limited vulnerability to the current risks in emerging markets, according to a statement today.

“Further gains in the peso are likely,” said Tsutomu Soma, Tokyo-based department manager of the fixed-income business unit at Rakuten Securities. “The upgrade was somewhat expected and supports sentiment for the peso.”

Bangko Sentral ng Pilipinas kept its policy rate unchanged at 4 percent today, as predicted by all 17 economists surveyed by Bloomberg.

“Our efforts to maintain macroeconomic stability made the economy more resilient in the face of challenges essentially coming from the external sector,” Bangko Sentral ng Pilipinas Governor Amando Tetangco told reporters in Manila after the rate decision.

The Philippines has improved “budget transparency,” is more resilient to risks affecting similar-rated emerging markets and is less reliant on China’s slowing economic growth, Moody’s analysts led by Christian de Guzman and Alastair Wilson wrote in today’s statement. The outlook on the rating is stable.

The yield on the government’s 6.375 percent dollar bonds due October 2034 dropped two basis points, or 0.02 percentage point, to 3.86 percent, data compiled by Bloomberg show. That’s the lowest level since May 2013.

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