Philippines Hopes Better Credit Rating Will Draw Investors
Philippines Hopes Better Credit Rating Will Draw Investors The Philippines has shrugged off decades of financial woes to earn its first investment-grade credit rating from one of the world's leading ratings agencies. Fitch Ratings cites the Aquino administration's improved money management, pro-growth policies and plans to increase revenues through a new "sin tax."
Economists say it was only a matter of time before the Philippines would be given an investment-grade rating. They point to the stock market, which has consistently reached record levels for more than half a year, and the solid yield on treasury notes backed by flush reserves.
Being one notch short of investment grade means a country's bonds are "junk" or that the country that issues the bonds has a stronger chance of having to pay higher interest and defaulting.
Citigroup Philippine Economist Jun Trinidad said, now that the "junk" status is behind it, international investors will come around to the Philippines.
"That constraint, that institutional rigidity is gone now," noted Trinidad. "So that's more financial benefits expected to come."
Trinidad was referring to attracting big institutional investors to its stock market, such as pension funds and large mutual funds.
Royal Bank of Scotland's Southeast Asia Senior Economist Enrico Tanuwidjaja said the investment grade rating is an overall endorsement of government policy.
"The market, in general, has acknowledged the improving fiscal, external position and then strong focus on the investment spending, governance and increasing tax revenue," Tanuwidjaja said. "Everything seems to chug along quite nicely.
Since he took office three years ago, President Benigno Aquino has been pushing major infrastructure projects that would entail partnerships between the public and private sector - with the hope of attracting foreign investment.
Twenty-five projects include light rail upgrades, school construction and new airports. But the foreign chambers of
Economists say it was only a matter of time before the Philippines would be given an investment-grade rating. They point to the stock market, which has consistently reached record levels for more than half a year, and the solid yield on treasury notes backed by flush reserves.
Being one notch short of investment grade means a country's bonds are "junk" or that the country that issues the bonds has a stronger chance of having to pay higher interest and defaulting.
Citigroup Philippine Economist Jun Trinidad said, now that the "junk" status is behind it, international investors will come around to the Philippines.
"That constraint, that institutional rigidity is gone now," noted Trinidad. "So that's more financial benefits expected to come."
Trinidad was referring to attracting big institutional investors to its stock market, such as pension funds and large mutual funds.
Royal Bank of Scotland's Southeast Asia Senior Economist Enrico Tanuwidjaja said the investment grade rating is an overall endorsement of government policy.
"The market, in general, has acknowledged the improving fiscal, external position and then strong focus on the investment spending, governance and increasing tax revenue," Tanuwidjaja said. "Everything seems to chug along quite nicely.
Since he took office three years ago, President Benigno Aquino has been pushing major infrastructure projects that would entail partnerships between the public and private sector - with the hope of attracting foreign investment.
Twenty-five projects include light rail upgrades, school construction and new airports. But the foreign chambers of