Philippines Outlook Stable

Moody’s Investors Service Tuesday affirmed the government of the Philippines’ Baa2 long-term issuer and senior unsecured debt ratings and maintained the outlook at stable.

The affirmation of the Baa2 rating and the assignment of a stable outlook balances positive and negative factors. On the positive side, Moody’s expects that the Philippines’ economic performance will remain strong while debt consolidation will continue and foster further convergence of key fiscal metrics versus corresponding peer medians. Moodys.com reported.

Set against that positive trend, domestic political developments could potentially undermine institutional strength and economic performance. Moreover, while broad macroeconomic stability has been maintained so far, a number of metrics indicate material capacity constraints that signal a risk of overheating.

Moody’s has also affirmed the government’s local currency and foreign currency senior unsecured ratings at Baa2, the government’s foreign currency senior unsecured shelf rating at (P)Baa2 and the senior unsecured ratings for the liabilities of the country’s central bank, Bangko Sentral ng Pilipinas, at Baa2. The outlook on BSP has been removed.

The Philippines’ country ceilings remain unchanged. The long-term foreign currency bond ceiling remains at A3, and the short-term foreign currency bond ceiling at P-2. The long-term foreign currency deposit ceiling remains at Baa2, and the short-term foreign currency deposit ceiling at P-2. Furthermore, the long-term local currency bond and deposit ceilings remain unchanged at A2.

The stable outlook balances positive and negative developments in the Philippines’ credit profile.

The Philippines’ real GDP growth averaged 6.4% per year between 2014 and 2016, more than twice the corresponding median for Baa2-rated countries. “We expect growth to be sustained at above 6% per year over the next two years, driven largely by the private sector.”