Investment News Analysis

Philippines remains investment-grade

Despite the uncertainty expressed by sectors of the business media, economists and financial analysts over how well President Elect, Rodrigo Duterte, will handle the Philippines economy, the ratings agencies are sticking by their sovereign credit ratings which give it investment-grade status. In light of the election result the three main agencies, Moody’s, S&P Global, and Fitch, put out statements on their assessment of the Philippines, through their spokesmen. Here’s what they had to say:

S&P Global Ratings: “We believe the new administration will maintain fiscal policy to keep fiscal deficits to low single digits. Policies affecting businesses are also likely to be supportive of continued investment growth. In the near term, however, businesses in the country may be more cautious about expanding given the uncertainties over the new government’s policy orientation”.

S&P Global added: “We expect the incoming administration to continue with policies that had contributed to sovereign rating improvements in the past few years. Duterte’s track record of more than 20 years in Davao gives few indications that he would embark on economic policies significantly different from the Arroyo and Aquino administrations”.

Moody’s: “Following the election, Moody’s noted the sovereign credit implications of the elections, if any, will only be determined over coming weeks and months as the new president forms a Cabinet and formulates economic and fiscal strategies”.

Moody’s added: “These trends [robust household consumption and services exports] are likely to continue in 2016. Moreover, the central bank’s focus on macroeconomic and broad financial system stability is not likely to be affected by the political transition”.

Fitch: “The agency does not expect the outcome of the Philippines election to have any immediate impact on the rating or outlook”.

Fitch added that it is observing if improved governance standards put in place during Aquino’s administration can be maintained along with rating sensitivities. “If that were to occur, it could be positive for ratings. Fitch will monitor further developments closely”.

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