(UPDATE) Moody's upgraded the foreign and local currency long-term bond ratings of the Philippines by one notch to Ba1 from Ba2 On Monday, citing the country's improved economic performance and continued fiscal revenue buoyancy.
But the move still left the rating one notch shy of coveted investment grade status for Asia's most aggressive sovereign debt borrower.
Moody's said the upgrade also reflected the country's enhanced prospects for growth over the medium-term, and a stable financial system. It said the outlook for the rating was stable.
"Despite the headwinds from softening external demand, the Philippines has demonstrated considerable economic strength and fiscal resilience," the ratings agency said in a statement.
Much of the enthusiasm for the Philippines -- not so long ago considered the "sick man of Asia" -- reflects President Benigno Aquino III's efforts to curb corruption, reduce the budget deficit and increase spending on infrastructure.
While revenues as a percentage of gross domestic product remain very low at around 15 percent and poor governance has hindered development, investors are prepared to give Manila the benefit of the doubt for now, especially if a promotion to investment grade level is near.
Manila raised a record P188 billion ($4.5 billion) last week from its second retail treasury bond issue of this year, giving the government greater borrowing flexibility for the rest of the year and into 2013.
It is also working on a $1 billion global note offer.
Standard and Poor's raised its rating on the Philippines to BB+ in July. Fitch Ratings has it at the same level.