MANILA, Philippines -Standard & Poor's raised the Philippines' long-term foreign currency credit rating by one notch, citing the country's improving economy and debt reduction efforts.
The upgrade to BB, with a stable outlook, from BB- was "a statement of confidence on the country's bright prospects moving forward," said Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr.
S&P said the new rating, which remains two levels below investment-grade, was prompted by the Philippines' strong external liquidity and growth prospects, which provide buffer against adverse shifts in trade or investment sentiment.
The rating agency also noted that the "upgrade reflects the progress achieved in debt reduction and the underlying fiscal consolidation, which brought public debt ratios in line with many of its ‘BB’ rated peers."
But it noted that the Philippines' still high public and external debts continue to hamper further movement toward investment-grade status.
Tetangco said, "the one notch upgrade by S&P is recognition of the fundamental strengths of the Philippine economy, which saw us through one of the worst global economic crises in decades."
For his part, Finance Secretary Cesar Purisima said this was a vote of confidence to the new administration's commitment to economic and fiscal reforms.
President Benigno Aquino reacted quickly to the rating upgrade, with his spokeswoman describing it as an endorsement of his government, which took office on June 30.
"This is a welcome development which shows that our efforts to restore confidence... can only be good for the country," spokeswoman Abigail Valte told reporters.
The Aquino government has been controlling its spending to keep the budget deficit within the official ceiling of P325 billion this year.