S&P: PHL on track for rating upgrade

THE PHILIPPINES remains on track for a possible credit rating upgrade as improving fiscal and external balances outweigh risks from the government's flood control controversy, Standard & Poor's (S&P) Global Ratings said.

- Katherine K. Chan

“We also see the Philippine sovereign credit metrics strengthening over the next one to two years,” the rating company said in a Feb. 3 report. “Over this period, we expect that narrowing fiscal and current account deficits could augment sovereign credit buffers sufficiently to better support a higher rating.”

S&P last affirmed the Philippines’ long-term “BBB+” and short-term “A-2” credit ratings in November. It also kept a “positive” outlook on the country, signaling that a rating upgrade is possible over the next one to two years if improvements in credit fundamentals are sustained.

The debt watcher said it remains optimistic about the Philippines’ medium-term growth prospects despite the political fallout from allegations of corruption tied to flood control projects.

However, it cautioned that the controversy could slow progress in strengthening the country’s credit profile.

“The political spillover of alleged corruption related to flood control projects may slow the credit improvement,” S&P said.