MANILA, Philippines - HSBC says local and foreign banks are now competing to finance long-term infrastructure projects in the Philippines, after the country received a credit rating upgrade from Standard & Poor's.
HSBC president Wick Veloso says the upgrade is expected to lead to cheaper borrowing costs as the Philippines is now deemed more credit-worthy.
Fifty-four projects are listed under the government's public private partnership projects but only seven of these have been awarded.
"There's a lot of competition. You've mentioned, it's not only domestic banks, a lot of regional banks and a lot of foreign banks, are very much interested. Especially, after the Philippines got this next investment grade rating... Everyone else wanted to be part of the Philippine story," Veloso said.
Veloso added the main challenge for banks is how to manage the risk for long-term investments.
"What's important for infrastructure projects is long-term financing. and in long term financing I believe when financial institutions are having a challenge because you don't raise infrastructure funding for 5 years... This is a 15 to 25-year financing so the name of the game is to be able to manage the risk. Everybody can identify the opportunity, but how you manage the risk for long-term investments, is going to differentiate those are participating in this business," he added.
-ANC Dateline Philippines, May 20, 2014