'Phl due for credit rating upgrade'

MANILA, Philippines - A Singapore-based fund manager said that the Asian markets, including the Philippines, are long overdue for a credit rating upgrade.

Prudential Asset Management global market strategist Robert Rountree said that the present set of ratings particularly on Indonesia, Thailand and the Philippines are lower than what the fundamentals require.

“We expect to see more re-ratings in Asia,” Rountree said, during the press launch of its latest investment and protection instrument.

The market strategist said the Philippines shows strong fundamentals and its domestic market has been performing well. Savings, investments, capital inflows from both domestic and foreign investors were strong as seen from the record levels of the Philippine Stock Exchange Index.

“All are looking very solid,” he added.

The general outlook is that the Philippines is poised to attain an upgrade of “a notch or two,” especially after Standard and Poor’s (S&P) improved its outlook on the country from stable to positive.

Moody’s Investor Service and S&P rate the country “BB” and “Ba2,” respectively, both indicating two notches below investment grade.

But Fitch Ratings marks the country with “BB+”, or an “adequate” perception of the ability of the national government to pay its debts.

One more upgrade would bring the Philippines into investment grade.

Meanwhile, Rountree said that the Asian picture is rosy while the global market remains stalled and volatile.

He notes that Asian currencies remain supported by good fundamentals, while it line-up the top Asian currencies led by Taiwan, Singapore, and the Philippines, Korea, China, Thailand, and Malaysia, in that order.

Asian corporate balance sheets are nearing the 2009 highs.

Earnings of listed Asian corporates have already bounced away from the 2008 low levels. Asian bonds are cheaper than the 2007 low, but in an upward trend, nearing the highs from the 2005 period.

In contrast, Rountree painted a bleak outlook on the global economy. The Eurozone may still slip into recession while the US economy is stale.

“The possibility of another large sell-off looms, although the Asian market would be able to deal with it,” the Prudential strategist said.

European banks have only a six percent  exposure to Asian banks, which is stronger than its developed counterparts.

Prudential Asset Management (Singapore) manages the Asian Local Bond Fund, a dollar-denominated bond fund and an alternative to the investment portion of the unit-linked life insurance products.

In the Philippines, Pru Life UK sells the unit-linked life insurance products including the new Asian Local Bond Fund.

Pru Life UK, one of the leading life insurance companies in the Philippines, reported total premiums P7.8 billion in 2010, landing it among the top 10 insurers. In 2009, total premiums stood at P3.5 billion.