NextGen Day

🌟💼 MANILA – The Philippine government is steadfast in its commitment to attain an “A” credit rating from international rating agencies by the end of President Ferdinand R. Marcos Jr.’s term, according to Finance Secretary Benjamin Diokno.

Currently holding a BBB+ sovereign credit rating from S&P Global, a leading rating agency, the Philippines aims to ascend to an A rating, one notch above its current standing, as an ambitious goal.

“Our ultimate goal is to get an A rating before the end of the President’s term. We know this will not be a walk in the park. But we are committed to working unceasingly to achieve our lofty goal,” Diokno stated during his weekly press briefing.

In May 2023, Fitch Ratings upheld the country’s BBB rating. They upgraded its outlook from negative to stable, reflecting increased confidence in the Philippines’ robust medium-term growth post-pandemic and sustained reductions in government debt-to-gross domestic product.

“An A rating would affirm the Philippines’ creditworthiness and serve as a strong signal to local and international business and financial communities that the country is conducive to long-term investments. In turn, this will increase investment and will eventually help us achieve our long-term economic plans,” Diokno emphasized.

Diokno also highlighted that attaining an A credit rating would reduce borrowing costs for both the government and the private sector, thus improving Filipinos’ overall quality of life.

“The Finance chief noted that the Philippines managed to maintain investor-grade ratings even during the pandemic, while other countries were downgraded.”

Acknowledging the challenges posed by the current global landscape, Diokno pointed out that “getting an A rating promises to be challenging,” referencing Fitch Ratings’ decision to downgrade the United States debt rating due to expected fiscal challenges and increasing government debt.

Despite the global uncertainties, Diokno stressed that the Philippines has demonstrated resilience. “In pursuit of the A credit rating, the Bangko Sentral ng Pilipinas and the Department of Finance organized in 2019 an Inter-Agency Committee on the Road to A Credit Rating Agenda, or the IAC on the Road to A,” he mentioned.

This committee aims to effectively coordinate member agencies to develop, execute, and oversee the implementation of the Road to A Roadmap.

“Moreover, the IAC aims to enhance engagements with analysts and investors; coordinate engagements with credit rating agencies and third-party raters; and increase the Philippines’ visibility through traditional and technology-based platforms,” Diokno said.

The IAC’s strategy focuses on achieving robust economic growth, prudent fiscal management, and robust governance standards and institutions.

Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. also stated during the briefing that the credit default swap (CDS) market indicates anticipation of the Philippines’ credit rating upgrade.

“If you look at the credit default swap spread, it’s based on a five-year horizon, just 69 to 70 basis points; we’re already at single A credit rating,” Remolona shared.

“According to the CDS market, they anticipate our credit rating to be upgraded to single-A. Credit rating agencies don’t just look at our capacity to borrow, and pay, but also the governance and fiscal policies that we pursue. In their view, our policies are good,” Remolona added. 📊🇵🇭💰

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