Japan Credit Rating Agency (JCRA) has improved the outlook on the credit rating of the Philippine sovereign from stable to positive. A rating outlook gives the probable direction for a particular credit rating. A positive outlook means that it is quite likely that there may be an improvement in the country’s credit rating soon.
JCRA’s rating for the Philippines’ long-term and foreign currency-denominated debt is BBB- ( read as BBB minus). This is the lowest investment grade credit rating.
The improvement in rating outlook was reportedly anchored on the country’s improving fiscal position, the appreciation of the peso, relatively lower inflation and interest rates, as well as the first quarter economic growth figures. JCRA will be monitoring the country’s performance to see if the gains in the economy will continue and if these are sustainable.
JCRA is said to be the most positive/optimistic about the Philippine sovereign compared to other international rating agencies. Would these have anything to do with the fact that they are also Asian, aside from being an international rating agency? Would Asian rating agencies have a better understanding of the nuances of Asian economies and market practices compared to US or Europe-based ones? Just a thought.
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