Fitch Ratings has raised the Philippines' rating to BBB- from BB+, the country's first-ever investment grade rating. Fitch also gave a stable outlook for the country’s credit rating.
"Investment grade opens up more sources of financing for our businesses, lowers the cost of borrowing, and encourages more investments, which in turn will lead to more jobs and greater income for our people," Finance Secretary Cesar V. Purisma said in a statement.
The news of the upgrade fueled a bull run in the country. The main-share Philippine Stock Exchange index rallied by 182.35 points or 2.74 percent towards its best ever finish of 6,847.47 on 27 March. A new intra-day peak was also hit at 6,873.89 close to the end of the session.
Fitch cited the country’s sovereign balance sheet as being comparable to those of ‘A’-rated nations, while a “persistend current account surplus, underpinned by remittance inflows” has made the country a “net creditor” from its previous deficit position.
FItch also noted the economy’s 6.6-percent economic growth for 2012 and the expected 5.5 percent growth for this year, both of which are “stronger and less volatile” than BBB-rated peers over the last five years.
“Improvements in fiscal management begun under President Arroyo have made general government debt dynamics more resilient to shocks,” Fitch said.
With the ratings upgrade, the government is expecting to see an increase in investment inflows, as many institutional investors allow the investment of funds in investment grade countries only.