Moody’s ups four Philippine banks

Moody's Investors Service said it upgraded the deposit ratings of the following four Philippine banks to Baa2/Prime-2 from Baa3/Prime-3: BDO Unibank, Inc.; Bank of the Philippine Islands; Land Bank of the Philippines; and Metropolitan Bank & Trust Co.

The action follows the upgrade of the Government of the Philippines' debt ratings to Baa2/Prime-2 from Baa3/Prime-3.

At the same time, the agency raised the bank financial strength ratings of BDO, Bank of the Philippine Islands and Metropolitan Bank to C- from D+ to reflect improvements in their standalone credit profiles. Consequently, it also raised these banks' baseline credit assessments to baa2 from baa3.

Moody's said it considers that the credit strength of the Philippine government is an important input in its assessment of the latter's capacity to provide support in times of stress, and believes that these four banks – due to their systemic importance – are more likely to fully benefit from the higher sovereign rating.

As a result, the agency also upgraded BDO's senior unsecured debt rating to Baa2 from Baa3.

Furthermore, Moody's upgraded the following ratings of Metropolitan Bank and which are notched off the bank's adjusted baseline credit assessment: local currency subordinated debt rating to Baa3 from Ba1 and foreign currency preferred stock rating to Ba2 (hyb) from Ba3 (hyb).

The outlooks on all ratings are stable.

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