Forex Flash: Fitch upgrades Philippines to investment grade – ANZ

FXstreet.com (Barcelona) - Earlier today, Fitch Ratings upgraded the Philippines’ Long-Term Foreign-Currency Issuer Default Rating (IDR) to BBB- from BB+. The Long-Term Local-Currency IDR has been upgraded to BBB from BBB-. The outlook on both ratings is stable. According to Strategist Irene Cheung at ANZ, “We think the other two major rating agencies S&P (BB+ Positive) and Moody’s (Ba1-stable) will upgrade the Philippines in the coming months.”

Fitch noted that the Philippines’ sovereign external balance sheet is considered strong relative to A range peers, let alone BB and BBB category medians. The rating agency highlighted the robust current account surplus, driven by strong remittances flows, which proved resilient even through the global financial crisis. The rating agency further noted that the improvements made under President Arroyo have made government debt dynamics more resilient to shocks. It also highlighted the Bangko Sentral ng Pilipinas’ (BSP) proactive use of macro-prudential measures, as well as contained inflation.