S&P rates Philippines bonds BB-

Standard & Poor's said it assigned its BB- senior unsecured debt rating to the $1 billion to $1.5 billion global bond issue due 2031 proposed by the Republic of the Philippines (foreign currency BB-/negative/B, local currency BB+/negative/B).

The sovereign credit ratings on the Philippines reflect its high debt and low fiscal flexibility, the agency said. Net general government debt, excluding guaranteed contingent liabilities of nonfinancial public enterprises, is estimated at about 72% of GDP for 2005, compared with the BB median of 45.5%.

Additionaly, the government continues to rely on external funding for a substantial part of its fiscal deficits, and close to 50% of its total debt is denominated in foreign currency.

S&P said the ratings on the Philippines, however, are supported by adequate external liquidity and the country's record of economic resilience in the face of external shocks and ongoing domestic political uncertainty, reflected in average real GDP growth of 4.4% over the past six years without significant fluctuation.

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