Japan’s Rating and Investment Information Inc. (R&I) has affirmed the country’s credit stature as a triple B or BBB-rated sovereign but whose outlook has been revised upward to “positive” from “stable.”
The outlook upgrade signals a high likelihood that the country’s credit standing is upgraded to the next higher level of A-rated countries whose borrowing costs are superior compared to triple B-rated economies like the Philippines at present.
“BBB+” is two notches higher than the minimum investment grade and a notch below the “A-“ rating, the Bangko Sentral ng Pilipinas (BSP) noted.
“A positive outlook by R&I indicates its views on the medium-term prospects of the country and that it “will upgrade the rating once the factors such as the economic growth path sought under the Philippine Development Plan 2023-2028, the stable macroeconomic condition, and the improving trend of fiscal consolidation are confirmed,” the BSP said.
The country’s robust macroeconomic underpinnings, its improving fiscal position, sound banking system, its external payments position and stable political environment contributed to the R&I assessment.
Newly appointed BSP governor Eli M. Remolona Jr. credited the local banking system as a source of strength for the $404 billion economy, saying the industry has maintained “more than adequate levels of capital and remained flush with liquidity. Unlike in previous crises, our banks are part of the solution rather than past of the problem.”
He expressed the view that easing headline inflation outturns strengthen the likelihood for rates to return within target range as soon as the fourth quarter this year.
“Nevertheless, if upside risks persist, the BSP is prepared to resume monetary policy tightening as necessary to anchor inflation expectations and safeguard the BSP’s price stability obejected,” Remolona said.
