I wasn’t expecting this today.
The Philippines has achieved history today upon receiving the BBB- rating from Fitch.To be exact the read the article in Business World about it.(below is an excerpt of the article)
Philippines secures investment grade rating from Fitch
INTERNATIONAL debt watcher Fitch Ratings today raised the country’s credit rating to investment grade — a first for the Philippines.
In a statement, the credit rater said it had raised the country’s long-term foreign-currency issuer default rating (IDR) to ‘BBB-‘ — a notch into investment grade — from ‘BB+’. It also raised the Philippines’ long-term local-currency IDR to ‘BBB’ from ‘BBB-‘.With an investment grade rating, the country is expected to attract more foreign direct investors, gain access to a larger source of funding, and reduce its borrowing costs.
Below is an official statement given by Pres. Benigno Aquino through Presidential Spokesperson Edwin Lacierda.
The rating BBB- is one of the ratings that means the country or entity is now in the investment level. The Philippines has been looking forward for such event after having a stellar 2012. The other two top rating agencies, Standard & Poors and Moody’s, still has a BB rate which is a notch below investment grade rating.
In simple terms or by way of example the ratings given by these credit rating agencies are like credit scores which tells the whole investment community that such nation or corporation has a good financial standing and is able to pay and manage its debt better and is a good place to invest money.
What is the benefit of having an investment grade?
Well with an investment grade the country now is deem a good place to do business and with that lenders are more than willing to lend because they are assured that there capital will return with good profit. Also with such good atmosphere business would most likely want to grab a piece of that “profitability” and thus inflows of funds will come not only on the lender’s said but on investor’s side as well.
One note that was mentioned is that in order to sustain such investment grade the Philippines has continue what it is doing today: Good Governance, healthy stock market, good banking practices, inflows from OFW, and a young and resilient population ready to face any crisis. Thus even though the Philippine Stock Market seems overpriced, a continued support from local stock investors is a must to keep this going.
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