Phl debt spreads narrow

MANILA, Philippines - The cost of borrowing from abroad fell in end-2013 after the country received another investment grade rating in October from a global debt watcher, the Bangko Sentral ng Pilipinas said.

In its Fourth Quarter Report on Economic and Financial Developments, the central bank said the Emerging Markets Bond Index (EMBI) + Philippine spreads averaged 150 basis points in the last quarter of 2013, a decline from the 169 basis points seen in the third quarter.

“Debt spreads narrowed as the country completed its ascent to investment grade rank,” the central  bank said.

“Moody’s (Investors Service) upgrade on the country’s credit rating to investment grade status aligns the country’s rating of that of S&P (Standard & Poor’s) and Fitch (Ratings) which both raised the Philippines credit score earlier (in 2013),” the BSP said.

Moody’s in October upgraded the country’s rating to Baa3, a notch from Ba1, following the robust performance of the economy, political stability, and improved governance.

The debt watcher also assigned a positive outlook on the rating which means further upgrade may be given in the next 12 to 18 months.

The Philippines’ received its first investment grade rating from Fitch Ratings in March last year, while the second was awarded by S&P in May.

But the narrowing of debt spreads was “temporarily widened on US tapering concerns and on the adverse impact of Super Typhoon Yolanda,” the central bank said.

The US Federal Reserve in December announced the start of its reduction in massive monthly purchases of US Treasuries and mortgage bonds. The move followed improvements seen in the US economy, and in recent jobs data.