S&P ups PLDT credit rating to investment grade

Manila, Philippines - New York-based Standard & Poor’s Ratings Services raised the long-term foreign currency credit rating of Philippine Long Distance Telephone Co. (PLDT) after it upgrade the country’s rating to one notch below investment grade.

The rating of PLDT for foreign currency was upgraded to BBB- or investment grade with a stable outlook from BB+ or one notch below investment grade with a positive outlook.

Likewise, S&P also raised the ASEAN scale long-term rating on PLDT to ‘axA-’ from ‘axBBB+’ and its senior unsecured debt to BBB- or investment grade from BB+ or one notch below investment grade.

The credit rating of PLDT was better than that of the Philippines whose rating was upgraded by S&P to BB+ or one notch below investment grade from BB or two notches below investment grade.

S&P said the foreign currency rating on PLDT continues to be constrained by our transfer and convertibility assessment on the Philippines of ‘BBB-’.

Paul Draffin, S&P credit analyst, said in a statement that the rating of the telecom provider reflect the country’s sound macroeconomic fundamentals and strong competition in the industry.

“The rating on PLDT also reflects the country and macroeconomic risk of the

Philippines and intense competition in the matured domestic cellular market,” Draffin said.

He also cited the company’s strong performance in the industry.

“PLDT’s strong position in the domestic market, diversified services, integrated network, and solid cash flow measures temper these weaknesses,” the analyst added.

The rating agency also upgraded the credit rating of state-owned Power Sector Assets & Liabilities Management Corp. (PSALM) and National Power Corp. (Napocor).

“We also affirmed the long-term local currency corporate ratings on PSALM and Napocor and revised the outlooks to stable from positive,” S&P said.

The foreign- and local currency credit ratings of both PSALM and Napocor were upgraded to BB+ or one notch below investment grade on a stable outlook from BB or two notches below investment grade on a positive outlook.

S&P credit analyst Rajiv Vishwanathan said the rating actions were undertaken after the foreign currency sovereign credit rating on the Republic of Philippines was upgraded.