Global debt watchers grade PHL peso bonds

Three global debt watchers on Wednesday rated the Philippine government's upcoming peso-denominated global bonds due 2036. Moody's Investors Services Inc. said it would assign a "Ba3" rating to the country's forthcoming peso-denominated bonds. The "Ba3" rating is three notches below investment grade. Standard & Poor's (S&P) and Fitch Ratings Ltd. said in separate statements that they would give the peso bonds a "BB" rating. Christian de Guzman, Moody's assistant vice president and lead sovereign analyst for the Philippines, said the "Ba3" rating is "anchored by the continued strength in the sovereign's external payments position and a favorable outlook for domestic-demand driven economic growth." "The rating is supported by a relatively sound and liquid banking system, which does not pose foreseeable risks to the government's balance sheet," De Guzman said. Moody's took note of robust overseas remittances from overseas Filipino workers and strong portfolio inflows from foreign investors that provide the economy and government finances enough buffers against external shocks. The "Ba3" rating also reflects continued weakness in "revenue collection as well as a large public-sector debt overhang," De Guzman said. S&P, meanwhile, said that its "BB" rating is supported by the strength of the "country's external balance sheet and favorable growth trajectory." The constraining factors on the ratings are high public sector and external debt — estimated at 35 percent of gross domestic product — and a weak fiscal profile, according to S&P. On the other hand, Fitch said its "BB" rating is in line with its rating on the Philippines' long-term foreign currency issuer default rating, which is also "BB." The Aquino administration is expected to launch Wednesday in New York the sale of at least $1 billion in peso-denominated global bonds. The government tapped Citi, Credit Suisse, Deutsche Bank, HSBC, J.P. Morgan, and UBS as joint bookrunners for the 25-year bonds. Proceeds from the bond sale would be used for the government's refinancing needs and budget operations. — JE/VS, GMANews.TV