MANILA, Philippines - Credit rating firm Moody's Investor Service has assigned a "Ba3" rating and a "stable" outlook to the Philippines' $1.5-billion global bonds.
A "Ba" rating is one notch below investment grade. A numeric modifier of "3" on the other hand, is the lowest in a scale of 1 to 3.
Moody's said the rating and the outlook considered the Philippines' rising gross international reserves (GIR), which stood at $43.7 billion as of end-November 2009. GIR refers to the country's total amount of foreign currency reserves managed by the central bank.
"The historically high level of official foreign exchange reserves--in part bolstered by resilient overseas remittances--helps to buffer the economy and government finances from external shocks," Moody's said.
Aside from GIR, Moody's also took into account the financial stability of the banking sector, and the country's debt situation given its swelling budget deficit.
The government is looking at a P293-billion budget deficit this year. For the first 11 months of 2009, the country's budget gap already stood at P270 billion, exceeding the full-year target of P250 billion.
"The Philippines' rating is supported by the country's fortified external payments position and a relatively sound and liquid banking system, which poses manageable risks to the government's balance sheet," Moody's said.
For his part, Moody's senior vice president and regional credit officer Tom Byrne said the outlook assigned to the global bonds took into account low inflation expectations for the Philippines in the short to medium term.
"Low inflation and a stable exchange rate are crucial for the government's debt affordability," he said.