Debt-Ridden Conglomerate Could Cause Philippines' Downgrade, Says S&P

Standard & Poor's warns that the Philippines could lose its investment grade rating if one of the country's family-run conglomerates does not bring its debt situation under control.


The credit rating agency granted the Philippines a BB+ rating on May 2, 2013. S&P became the second major rating firm to give the Philippines an “investment grade” rating after Fitch Ratings.


The agency said that the structure of the country’s economy, which is heavily dependent on family-owned conglomerates, was "a source of vulnerability."


“We may… lower the ratings if problems at one of the large conglomerates impair investor confidence,” S&P said in an analysis without revealing the name of the conglomerate.


While the conglomerate hasn’t been named, S&P could be referring to San Miguel Corporation, the largest diversified business group in the Philippines. The company has been under constant credit watch by S&P and has received several downgrades in the past.


San Miguel just recently secured a $1.3 billion loan facility from five foreign lenders to pay off its existing debts and refinance its existing loans.