Improving Credibility to the International Community

Apart from the credit rating upgrade given by Fitch and Standard & Poor’s earlier this year, the recent and third investment rating upgrade has cemented the Philippines’ascent to investment grade status and perhaps improves the image and credibility of the Philippine economy to the international community.

With the Baa3 investment grade rating from Moody’s Investors Service, it brings so many things to the Philippine economy most especially that it also has a positive credit outlook. So, the higher the grade, the more credible the borrower and the lower the cost of debt. Although many have anticipated this development to come yet it is crucial in attracting more investments pouring in to the country. And with a robust economic performance since last year that grew 6.8 percent and 7.6 in the first half this year, the Philippines could become the latest investment hub of the world.

And according to experts, the latest investment rating upgrade means a good image for the Philippines in attracting more investments, that it is safe to do business; it lowers the interest in the borrowing cost as it signifies a strong capability to pay its debt; it reduces the cost of government development including the companies in the country, making it a lot easier to expand and lastly, more budget for infrastructure and social services spending. Although it may not translate into jobs or lower the rate of poverty unless reforms are made in improving the business environment and loosen up restrictions on foreign direct investments.

Moody’s has stated that the Philippine economy’s fast growth despite a slowing global economy was supported by steady overseas Filipino remittance inflows and healthy credit growth. And hopefully that should sustain the Philippines’ strong economic growth hence improving its credibility to the international community.

Image from Rappler.com

Philippines’ Ascent to Investment Grade

The most anticipated credit rating upgrade for the Philippines has been finalized. Although it is expected because the Philippines has already received an investment grade rating from Fitch last March and it was followed with another from Standard & Poor’s later in May. And so last Thursday (3 October 2013) the last major debt-watcher, Moody’s, granted and raised the Philippines’ investment grade status to a Baa3 rating with a positive credit outlook.

Although the “Baa3” rating is the lowest in the investment grade ratings, yet it is well enough to place the Philippines’ economic performance on par with Turkey and Spain. And it is also considered a critical milestone in lifting the country’s economic status from one of Asia’s weaker economies which was once even considered “the sick man of Asia”. And the economic growth of 6.8 percent last year and 7.6 percent in the first half of 2013 are among the highest in Asia-Pacific and remained one of Asia’s best performers.

According to Moody’s, “The Philippines’ economic performance has entered a structural shift to higher growth, accompanied by low inflation.”

With three investment rating upgrades in succession, it only means one thing to the Philippines, a good image with a brighter outlook to the eyes of the investors. And with the badge of credit worthiness, it also reflects the confidence of the international community with regards to the strength of the Philippine economy. Many believe that there might be another upgrade in the coming years before 2016, the time when the current President steps down. And so what’s this latest credit rating upgrade means to the Philippines?

An improving credibility to the international community.

This post has been posted at "It's All About Seth" which is my wife's blog and I am reposting it here to have more exposure. Image from Rappler.com