Fitch Ratings raised the Philippines’ credit rating to investment grade now. Philippines is a first for the Southeast Asian nation. The rating raised in order to promote investment and elevate the country’s long-term growth potential.
The upgrade to ‘BBB-‘ is a vote of confidence in the government’s efforts to achieve fiscal sustainability, curb corruption and increase infrastructure spending, and comes as a growing number of much larger economies in the West struggle to avoid credit rating downgrades.
Fitch said Manila has had stronger and less volatile growth than its peers over the last five years, and expects trend GDP growth of 5-5.5 percent in coming years.
The Philippine central bank has cleaned out its funds over the past year, spending billions of pesos to shield its currency and economy from the impact of large inflows of foreign money.
Investors have already been pricing Philippine bonds at levels similar to investment-grade nations. But by having it made official by Fitch, it will reduce the country’s borrowing costs and widen Manila’s base of potential investors.
Standard & Poor’s raised its rating outlook for the Philippines to positive from stable in December and said it could be awarded investment grade status if it follows through on reforms to improve revenues and boost growth.