The NICE Investors Service praises government reforms and cites rising infrastructure investments for the recent upgrade


The credit image of the Philippines received yet another boost from the latest rating action by the National Information and Credit Evaluation (NICE) Investors Service, citing the country’s governance reforms and intensified campaign for infrastructure development. The credit rating estimates the credit worthiness—evaluation of the Philippines’ ability to repay debt as prepared by the credit rating agency.

Based in Seoul, South Korea, NICE upgraded the country’s credit rating a notch higher from the minimum investment grade of BBB- to BBB. As a result, this upgrade tightly secures the Philippines’ place within the investment-grade territory. Based on Standard & Poor’s ratings, the Philippines credit rating is now on the same status of such countries as Brazil, Russia, Mexico, Peru, and Bahrain. With the BBB credit rating, the Philippines is now rated higher than other fast growing economies such as Vietnam, Mongolia, India, and Columbia.

In a recent statement last January 22, 2016, NICE, which is based in South Korea, said the upgrade was anchored on “improved government transparency as well as enhanced environment backed by expanded infrastructure and social overhead capitals in the form of public-private partnerships.”

The upgrade came amid sustained rise in infrastructure investments made by the government—rising from 1.8 percent of gross domestic product (GDP) in 2010 to 5 percent of GDP for 2016.

$4.8 billion in infrastructure contracts have been awarded to private-sector investors since 2010 under the Public Private Partnership (PPP) program, making the Philippines one of the most aggressive infrastructure markets in the ASEAN. Talk to a local or any traveler in the country and the dire need for improving infrastructure would certainly be on the top of the wish lists for the Philippines.

The Philippines’ new credit rating with NICE is labeled with a “stable” outlook, meaning that it may stay the same at least over the short term despite challenges posed by external developments.

In contrast to the country’s peers, NICE explains that the Philippines is viewed to be more resilient to shocks, such as the impact of a slowing Chinese economy in addition to market volatility arising from higher interest rates in the United States. “Considering its trade structure and strong FX (foreign exchange) liquidity, the impact of global economic uncertainties such as slowdown of the Chinese economy and US interest rate hike will be manageable,” NICE said.

For the short and medium term, NICE projects the Philippines to sustain robust economic growth of 6.3 percent over the short and medium term. Over the past few years, the Philippines has received investment grading ratings from Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings. With the 24th positive rating action for the Philippines under the Aquino administration (9 outlook changes to “positive” and 15 actual hikes in credit ratings from various agencies), economic officials were pleased with the latest credit-rating upgrade. “The string of favorable actions from credit rating agencies, the latest of which is from NICE Investors Service, resonates the process of economic strengthening that the Philippines has undergone over the years. Contributory to this process were forward-looking monetary policy, proactive bank supervision, and prudent external accounts management, which have played crucial roles in promoting a stable inflation environment and a strong financial system,” BSP Governor Amando M. Tetangco, Jr. said.

Finance Secretary Cesar V. Purisima remarked, “Virtuous cycles result from dogged discipline, even when political headwinds seem too strong. Expanded fiscal space has opened up a Pandora’s box of opportunities in infrastructure, allowing us to play a fast game of catch-up with our neighbors.” Later adding that, “With increased transparency, we have empowered citizens who participate in the process of governance, and who—having known the gains reforms can bring—will refuse to roll back progress.”

Purisima also noted that with this latest credit rating action from NICE, Fitch Ratings remains the only agency that assigns the minimum investment grade to the Philippines. The others assign higher ratings. Investor Relations Office (IRO) Executive Director Editha L. Martin said upgrades in credit ratings have provided concrete benefits for the economy, including improved business confidence and reduced borrowing cost for the government. The latter has contributed to lower commercial lending rates for consumers and businesses as well, which in turn, fuels consumption and investments. “Having reaped the gains of investment grade sovereign credit ratings, there should be no room for the economy to slide back. The Filipino people, as it is incumbent upon them, are expected to demand from our leaders the kind of governance that will ensure that the economic transformation of the Philippines over the last half decade transcends changes in political settings,” Martin said.

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