Global investment firm Goldman Sachs expressed confidence on the Philippines’ resilience and strong positioning against credit rating peers in recovering from the pandemic on the back of low debt burden, current account surplus, and robust and sustainable growth over the next two years.
It said Moody’s Investor Service’s recent affirmation of the Philippines’ ‘Baa2’ rating with ‘stable’ outlook was a vote of confidence on the country’s fiscal and external buffers plus policy flexibility during the crisis.
Goldman Sachs president for Asia excluding Japan Todd Leland said in a letter to Finance Secretary Carlos Dominguez III that the investment firm was “delighted to see Moody’s affirmation of its Republic of the Philippines stable Baa2 rating” as reflected in the debt watcher’s latest credit analysis report.
“This is reflective of ROP’s relative resilience in view of Moody’s negative rating action on 58 sovereigns globally since the start of the pandemic in March 2020. We believe that this rating affirmation is a vote of confidence on ROP’s fiscal and external buffers, and policy flexibility during crisis periods, thanks to the astute management by its economic team, under your very able leadership,” Leland said in his letter.
Leland said Moody’s agreed with Goldman Sach’s assessment “of ROP’s strong positioning versus its rating peers globally.”
Moody’s said it was expecting the country to outperform most of the sovereigns it rates in terms of average growth up to 2025. The international debt watcher cited its 10-year average growth projection for the Philippines for the period 2016 to 2025 at 4.8 percent—despite the sharp contraction last year resulting from the pandemic.
“Although this 10-year average includes the steep recession in 2020 associated with the global coronavirus pandemic, we expect the Philippines to grow faster than nearly 85 percent of rated sovereigns,” Moody’s said in the report released on July 26, 2021.
The debt watcher said the recession in 2020 did not represent a material weakening of the Philippines’ growth prospects.
Moody’s affirmed the Philippines’ “Baa2” rating and the stable outlook in July 2020. Following the review meetings conducted in June this year by its analysts with resource persons from the government and the private sector, Moody’s regarded the Philippines’ ‘Baa2’ rating and the stable outlook as well placed.
‘Baa2’ is a notch above the minimum investment grade. The “stable” outlook indicates that the upside and downside risks are balanced and that the rating is unlikely to change within the short term.