S&P's Philippines ratings unaffected

Standard & Poor's said its credit ratings on the Republic of the Philippines (BB-/stable/B) are unchanged despite President Gloria Macapagal-Arroyo's recent decision to declare a state of emergency and events that followed.

On Feb. 9, S&P revised its outlook on the ratings to stable from negative while affirming the foreign and local currency ratings to reflect improved expectations of the country's ability to maintain the fiscal consolidation needed to reduce its high public and external debt while acknowledging that political risk persists.

Should the current political crisis worsen and become protracted, the agency said policy and economic reforms could be delayed; any signs that political considerations could overshadow ongoing fiscal consolidation efforts will therefore have negative credit implications.

S&P said a resulting loss of investors' confidence and demand for a higher risk premium would also expose the country's external vulnerability, given that almost one-half of its debt is foreign currency-denominated.

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