INTERNATIONAL credit watchers assessed and assigned ratings to the Philippine government’s planned samurai issuances, mirroring that of the country’s standings for the ratings agencies.
In a statement, Moody’s Investors Services assigned a “Baa2” senior unsecured rating to the government’s issuances.
Moody’s said the Japanese yen-denominated multitranche bond offerings by the Government of the Philippines, with planned maturities of 3, 5, 7 and 10 years, are direct, unconditional and unsecured obligations of the Government of the Philippines and therefore will rank “pari passu” or equal to all other senior unsecured debt obligations of the issuer.
Over the weekend S&P Global Ratings, meanwhile, assigned its “BBB+” long-term foreign currency rating to the issuance—also ranking equal with the country’s ranking for the credit ratings agency.
“The notes represent direct, general, unconditional, unsecured, and unsubordinated obligations of the sovereign, and rank equally with the sovereign’s other unsecured and unsubordinated debt obligations,” S&P said.
Moody’s said the emergence of macroeconomic instability that would lead to a deterioration in fiscal and government debt metrics and/or an erosion of the country’s external payments position would likely prompt a downgrade of their ratings to the Philippines, and consequently their ratings of the issued samurai bonds.
Meanwhile, a marked convergence of per-capita incomes and revenue generation, and as a result debt affordability, with higher-rated peers would trigger a rating upgrade of the Philippines’s sovereign rating and the bond issuance, as well.
“This could materialize over time as the government makes greater progress on its reform agenda, including addressing infrastructure gaps, increasing competitiveness and the ease of doing business, and ensuring sustainable and inclusive growth,” Moody’s said.
In August last year, the Philippine government returned to the yen-denominated samurai bond market after an eight-year hiatus, with a multitranche ¥154.2-billion transaction, or $1.39 billion, which yielded a weighted average spread of 34.7 basis points above benchmark.