S&P Global Ratings assigned a Group C jurisdiction ranking assessment to the Philippines’ national insolvency regime, citing a weak legal framework for creditors and high rule-of-law risk.
Malaysia was assigned a Group B ranking, reflecting a satisfactory legal framework for creditors.
The jurisdiction ranking assessment, which indicates the relative degree of protection afforded to creditors’ interests and the predictability of proceedings, reflects a weak assessment of creditor-friendliness and high rule-of-law risk for the Philippines.
S&P Global said the high rule-of-law risk undermines the predictability of enforcing contractual rights and resolving insolvencies.
The agency noted insufficient empirical evidence on the implementation and enforceability of the Philippines’ Financial Rehabilitation and Insolvency Act (FRIA) of 2010. The degree of asset value preservation is considered low given, a lack of established precedents where creditors have received a recovery rate higher than 30 percent.
The Group C ranking means S&P Global Ratings will assess subordination of debt for its issue ratings on Philippines entities’ borrowings.
Mitigating these weaknesses, the Philippines’ legal framework is generally supportive of entity reorganization as a going concern and the country has adopted the UNCITRAL Model Law on Cross-Border Insolvency, it said.
Meanwhile, the Group B ranking for Malaysia reflects medium creditor-friendliness and intermediate rule-of-law risk.
The agency found that Malaysia’s insolvency laws and practices generally support creditors, with recent enhancements like the Companies (Amendment) Act 2024. Malaysia is also in the process of adopting the UNCITRAL Model Law on Cross-Border Insolvency through the Cross-Border Insolvency Bill 2025. Offsetting these strengths are insufficient empirical evidence on the realization of recoveries and a limited record of implementation following the latest amendments.
In Group B jurisdictions, S&P Global Ratings will assign recovery ratings and make notching adjustments to issue credit ratings on the debt of nonfinancial corporate issuers and certain nonbank financial services companies. For these jurisdictions, recovery ratings are capped and issue credit ratings may be set up to one notch above or up to two notches below an issuer credit rating.
The jurisdiction ranking assignments have no impact on existing credit ratings. The assessments are based on the criteria “Methodology: Jurisdiction Ranking Assessments,” published on Jan. 21, 2016, S&P Global said.
