S&P lifts Philippines debt

Standard & Poor's said it raised the Republic of the Philippines' long-term foreign-currency sovereign credit rating and its foreign-currency senior debt to BB from BB-. The recovery rating on the debt remains 3, which signals the expectation of an average recovery of 60% to 70% in the event of a distressed debt exchange or payment default.

The agency affirmed the republic's BB+ long-term local-currency rating, B short-term rating, BB+ transfer and convertibility assessment and axBBB+/axA-2 ASEAN scale ratings.

The outlook is stable.

The agency said it upgraded the Philippines based on its steadily improving external liquidity profile and the underlying strengths of its external accounts, which increasingly mitigate the vulnerabilities posed by still-high public and external debt and provide a buffer against adverse shifts in terms of trade or investor sentiment. The upgrade also reflects the progress achieved in debt reduction and the underlying fiscal consolidation, S&P said.

A narrow revenue base and high incidence of tax evasion remain constraining factors on the sovereign rating, the agency said.

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