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By Bettina Faye V. Roc, Senior Reporter

Government hopeful of Moody’s upgrade

Posted on July 11, 2014

THE GOVERNMENT is optimistic that the country will secure another credit rating upgrade after meeting with Moody’s Investors Service officials last week as part of a London visit.

A five-man team led by Finance Secretary Cesar V. Purisima staged a non-deal road show in the European city, which the government’s Investor Relations Office (IRO) yesterday said yielded “very positive” feedback.

Hong Kong and Shanghai Banking Corp., Ltd. and Standard Chartered Bank were the lead arrangers. Mr. Purisima was joined by National Treasurer Rosalia V. de Leon, Bangko Sentral ng Pilipinas (BSP) Assistant Governor Ma. Cyd Tuaño-Amador, Insurance Commission chief Emmanuel F. Dooc and Government Service Insurance System President and general manager Robert G. Vergara.

The meeting with Moody’s was held July 4 at the sidelines of the road show, the IRO said, and was “deemed vital” given the debt watcher’s “positive” outlook on the Philippines’ rating, which indicates a potential upgrade in the next 12-18 months.

Moody’s last October upgraded the country to Baa3 -- the lowest investment grade -- with a “stable” outlook. Standard & Poor’s earlier this year raised its rating to BBB -- a notch further into investment grade -- with a stable outlook.

“Moody’s has recently upgraded Peru by two notches, so I am hopeful that developments in the Philippines will also be recognized,” Mr. Purisima was quoted as saying. “I believe the Philippines also exhibits stable macroeconomic fundamentals, strong fiscal performance, and promising legislative reforms.”

The Finance chief said the team discussed the latest developments and outlook on the Philippine economy and likewise stressed the BSP’s commitment to maintain domestic price and financial stability.

“The meeting with Moody’s went well. Representatives from Moody’s asked us to discuss monetary policy actions given inflation trends, real estate market developments, and external payments developments, among others,” the BSP’s Ms. Tuaño-Amador said.

Overall, the road show was a success, officials said.

“Feedback from the investors was very positive, and there seemed to be wide support for the view that the Philippine economic narrative continues to be one of favorable growth dynamics and broad macroeconomic stability,” Ms. Tuaño-Amador said.

The Treasury’s Ms. De Leon said foreign investors likewise acknowledged the resiliency of the Philippines to external shocks.

“Investors remain impressed with the economic performance of the Philippines amid challenges coming from the taper [of the US Fed’s stimulus program], increasing interest-rate environment, slowdown of China, and natural disasters,” she said.

Among others, the officials told portfolio investors that the Aquino government’s move to lay down the foundation for good governance, along with enhanced citizen participation, financial management, and infrastructure development initiatives, would support economic gains beyond 2016.

The government is targeting economic growth of 6.5-7.5% this year, 7-8% next year and 7.5-8.5% in 2016.

These targets, economic managers have said, are “attainable” despite the slower 5.7% expansion recorded in the first quarter of this year, which they noted was due largely to the temporary effects of recent natural calamities.