RP, 4 companies get Moody’s Upgrade

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RP, 4 companies get Moody’s upgrade

The Philippines and 4 local corporations had their credit ratings with Moody’s Investors Service upgraded.

The Philippines’ sovereign credit rating was raised by a notch—from B1 to Ba3—because of its resiliency in the face of a global downturn. The local firms are benefiting from the increase in the Philippines’ own credit score.

Moody’s said it upgraded the credit ratings of National Power Corp. (Napocor), Power Sector Assets and Liabilities Management Corp. (PSALM) and CE Casecnan Water and Energy Co.—all state-owned firms—from B1 to Ba3.

Ba3 is three notches below investment grade, while B1 is four notches below.

Most state-owned companies enjoy the same credit ratings as that of the government because their debts carry a sovereign guarantee. Corporations cannot have credit ratings higher than that assigned to the sovereign.

Also, the credit rating of Philippine Long Distance Telephone Co. (PLDT) was upgraded by a notch from Ba2 to Ba1.

Moody’s said nearly $2 billion worth of bonds earlier issued by the four companies would be positively affected by the ratings upgrade. The improved ratings are expected to result in the reduction in interest rates for said bonds in the secondary market. An increase in credit rating encourages investors to invest in bonds sold by the concerned entities.

There are $1 billion worth of debt securities recently issued by PSALM, $550 million by PLDT, $490 million by Napocor and $24 million by Casecnan—all will be affected by the ratings upgrade.

The outlook assigned by Moody’s to all four corporate entities is “stable,” which means that the existing credit ratings are free from risk of downgrades for at least a year.