Fitch rates Philippines bond exchange BB

Fitch Ratings said that it expects no sovereign rating implications to follow from the offer of the Republic of the Philippines to exchange up to $3 billion from $17.7 billion of its outstanding sovereign global bonds.

Fitch said it views the recent global bond offering and debt exchange as part of the Republic's broader liabilities management program.

The offer is extended to holders of 14 bonds maturing from 2011 to 2031, and is scheduled to expire Sept. 28, Fitch said. Eligible bonds maturing from 2011 to 2017 can be exchanged for newly-issued dollar-denominated global bonds maturing in 2021, the agency said.

The Philippines' 6.375% $1.85 billion global bonds maturing in 2034 will be re-opened, for which eligible bonds maturing from 2011 to 2031 can be exchanged. Fitch said it assigned an expected BB long-term foreign-currency ratings to both securities under the Philippines' forthcoming bond exchange offer.

The rating is contingent upon receipt of final documents.

The sovereign ratings reflect a balance between the strength of external finances well-supported by strong foreign remittance inflows against some poor economic fundamentals, such as low investment and incomes, the agency said.

The ratings also consider weaknesses in the public finances, including the sovereign's chronically-low tax take, Fitch added.

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