S&P raises Philippines' rating outlook to positive


Posted at Dec 16 2011 05:34 PM | Updated as of Dec 17 2011 01:34 AM

MANILA, Philippines - Debt watcher Standard & Poor's raised its outlook for the Philippines to positive from stable, indicating that a rating upgrade is likely soon.

S&P said the revised rating outlook was supported by the Philippines' strong external liquidity and improving fiscal position.

It affirmed the country's foreign currency rating of 'BB/B' and local currency rating of 'BB+/B', two notches below investment grade.

"We revised the outlook to positive to reflect our assessment that the Philippines' external vulnerability has diminished," said S&P's credit analyst Agost Benard.

Benard said the Philippines' relatively low income level and weak, albeit improving, fiscal profile are "balanced" by its external liquidity position and track record of moderately strong growth.

"The ratings could be raised on material progress in achieving a sustainable structural revenue improvement or further strengthening of the public balance sheet, yielding reduced fiscal vulnerability," said Benard.

A revision in the outlook to positive is almost always followed by a rating upgrade.

In June, Fitch Ratings raised the Philippines' credit rating to one notch below investment grade.