S&P downgrades Philippines

Standard & Poor's said it lowered its long-term foreign currency sovereign credit rating on the Republic of the Philippines to BB- from BB and its long-term local currency sovereign credit rating to BB+ from BBB-. S&P also lowered its short-term local currency sovereign credit rating on the Philippines to B from A-3 and affirmed its B short-term foreign currency sovereign credit rating.

The outlook is stable.

S&P said the ratings on the Philippines are constrained by the following weaknesses: high public sector debt and weak fiscal flexibility, heavy public sector reliance on foreign currency financing and a high level of contingent liability posed by poor financial system indicators and government guaranteed debt.

The ratings are supported by adequate external liquidity and a record of steady economic growth, the agency said.

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