Global debt watcher Moody’s Investors Service has assigned an investment grade of “Baa2” long-term foreign currency senior unsecured rating to the Bank of the Philippine Islands’ $2-billion medium-term note program.
Moody’s said in a statement Monday the rating was in line with the bank’s “Baa2” foreign currency deposit rating.
Moody’s said the notes issued under the program constituted the issuer’s direct, unconditional, unsubordinated and unsecured obligations, and would rank pari-passu with the bank’s other senior unsecured obligations.
“The rating is underpinned by BPI’s baa2 baseline credit assessment and Moody’s expectation of a very high probability of support for the bank from the government of the Philippines (Baa2 stable) in times of need. The rating does not receive an uplift because the bank’s baa2 BCA is already at the same level as the sovereign rating,” it said.
Moody’s said the ratings did not apply to any individual notes issued under the program. Ratings on individual notes issued under the program will be subject to Moody’s satisfactory review of the terms and conditions set forth in the final base and supplementary offering circular, and the pricing supplements of the notes to be issued.
“BPI’s baa2 BCA takes into account the bank’s consistently robust capital and liquidity profiles, which reflect disciplined and prudent business growth,” Moody’said.
It said BPI’s MTN program rating of (P) Baa2 was at the same level as the sovereign rating of the Philippines. “It is unlikely for BPI to be rated above the sovereign, as we view the correlation of risk between the bank and the sovereign to be high.”
Moody’s said if the sovereign was upgraded, it cited some factors that could result in an upward revision of the bank’s BCA and ratings.
These are the consistent reduction in the bank’s nonperforming assets, non-performing loans, and foreclosed assets; a steady improvement in the bank’s profitability levels, as reflected by improvements in core earnings and reductions in credit costs; or higher levels of loss-absorption capacity, as reflected by steady improvements in the bank’s capitalization. With AFP