Moody's Investors Service has assigned a Baa3 rating to the Government of the Philippines' US dollar bond offering maturing in 2024. A provisional rating of (P)Baa3 was also assigned to the government's US shelf programme. The outlook is positive. RATINGS RATIONALE The Philippines' Baa3 government bond rating is supported by strong growth performance in the context of macroeconomic stability. Over the past two years, the Philippines has recorded one of the highest rates of real GDP growth in the Asia-Pacific and among rating peers, while maintaining inflation at low levels and the current account in surplus. Credit support also come from a track record of narrow fiscal deficits and a declining debt burden. The Philippines' credit profile has benefited from an improvement in its debt structure, as the government has taken advantage of favorable financing conditions to lower debt servicing costs and mitigate refinancing risks. Notably, its financing needs have been increasingly met using domestic sources. Funding conditions for the Philippines remained stable through the bout of market volatility that afflicted emerging markets in 2013. This points to the country's relative lack of vulnerability to external financial shocks, such as those arising from anticipated tapering by the US Federal Reserve of its quantitative easing policy. Credit challenges include low per capita income and revenue mobilization. Only India has a lower per capita GDP among investment grade countries. Although the Philippines' revenue base remains narrow, and revenue to GDP is relatively low, gains from more efficient tax administration have accommodated large increases in infrastructure spending. At the same time, the relatively high proportion of government debt denominated in foreign currency renders the Philippines more susceptible to currency risks as compared to peers. In addition, the favorable political climate that has facilitated the government's improved policy performance may face new challenges from recent political scandals or the formidable reconstruction challenges from Typhoon Haiyan. Although the typhoon exacted a major humanitarian toll and significant economic damages, we do not expect long-term potential growth or the government's fiscal position to be affected materially. The positive rating outlook reflects our expectation that prevailing economic and fiscal trends will continue over the rating horizon of one to two years. In addition, the Philippines' healthy external position is likely to remain intact with foreign exchange reserves currently exceeding external debt. The current account continues to be bolstered by remittance inflows from overseas Filipinos and services exports, particularly from the business process outsourcing sector. GDP per capita (PPP basis, US$): 4,380 (2012 Actual) (also known as Per Capita Income) Real GDP growth (% change): 6.8% (2012 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 3.0% (2012 Actual) Gen. Gov . Financial Balance/GDP: -2.4% (2012 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: 2.8% (2012 Actual) (also known as External Balance) External debt/GDP: 32.3% (2012 Actual) Level of economic development: Moderate level of economic resilience Default history: No default events (on bonds or loans) have been recorded since 1983.
Most Popular Stories
- Obama Administration Releases Proposal to Regulate For-Profit Colleges
- Apple, HP, Intel May Take a Hit from Slowdown in Smartphone Sales Growth
- Elizabeth Vargas' Husband Marc Cohn Addresses Rumors
- Keurig Adds Peet's coffee, Alters Starbucks deal
- FDIC Files Lawsuit on Behalf of Banks Allegedly Hurt by Libor Scandal
- Motley Crue's Nikki Sixx Marries Model Courtney Bingham
- U.S. to Relinquish Gov't Control Over Internet
- Chinese e-Commerce Giant Alibaba Gears for IPO in U.S.
- Some California Cities Seeking Water Independence
- Will Missing Malaysian Jet Prompt Aviation System Change?