THE move of major credit watchdog Fitch Ratings to upgrade the Philippines’ sovereign rating to “BBB” from “BBB-“ augurs well for the planned bond offering of the government in 2018, National Treasurer Rosalia de Leon said Friday.
De Leon said in a statement said the development provided a resounding endorsement of the Duterte administration’s economic strategy anchored on a comprehensive tax reform plan and an unprecedented infrastructure modernization program.
The Bureau of the Treasury is currently preparing for the country’s next global bond offering next year while maintaining the borrowing mix at 80 percent from domestic sources and 20 percent from foreign markets.
“We welcome this latest favorable action from Fitch, which is a resounding testament to the country’s sustained strong economic fundamentals and favorable growth trajectory. This augurs well for our next global bond offering even as the market has priced our bonds much tighter than our ratings,” De Leon said.
She said the primary focus of the Duterte administration’s economic team was “on delivering results to create more jobs and improve the lives of our people.”
Finance Undersecretary and chief economist Gil Beltran said the upgrade was the result of a stronger public sector finance outlook for the Philippines “brought about by improved tax administration and the expected passage of tax reforms, along with a prudent monetary policy in the face of global financial volatility.”
“Also, we have unveiled a ‘Build, Build, Build’ infrastructure program, sectoral reforms and a list of Ease of Doing Business programs that will enhance the competitiveness of domestic industries and boost GDP growth to seven to eight percent in the medium term,” Beltran said.
Fitch’s upgrade of the Philippines’ credit rating was the first since March 2013, when it gave the Philippines its very first investment grade. Its rating for the Philippines is now at par with those of S&P Global Ratings and Moody’s Investor Service.
Finance Secretary Carlos Dominguez III said earlier several international banking institutions, including European banks, had expressed interest in the Philippines’ planned $1 billion dollar-denominated global bond float early next year.
Deputy Treasurer Erwin Sta. Ana also said both banks and potential investors had been providing positive feedback on the planned bond issuance.
The government plans to borrow P888.227 billion in 2018, with 20 percent or P176.269 billion of the amount to be secured from foreign markets.