S&P cuts Philippines outlook to ‘stable’ amid rising risks from Middle East conflict

By Katherine K. Chan, Reporter 

S&P Global Ratings cut its outlook on the Philippines to “stable” from “positive,” citing the impact of the energy crisis on the country’s external and fiscal positions.

Still, the debt watcher affirmed the country’s “BBB+” long-term investment grade rating, which is a notch below National Government’s target “A” level grade. It likewise kept its “A-2” short-term rating for the country.

“We revised the rating outlook on the Philippines to stable from positive because the war in the Middle East has increased risks for the trajectory of the country’s external and fiscal metrics,” it said in a statement released Thursday.

A stable outlook means the Philippines’ credit rating will likely be maintained over the next two years, reflecting expectations that the country will “maintain healthy economic growth rates that will allow fiscal performance to improve gradually while external metrics deteriorate slightly.”

S&P noted that the Middle East war will likely continue to disrupt economies in the coming months even as they expect the conflicts to peak and the Strait of Hormuz’s closure to ease this April.

“However, uncertainty over how the situation will unfold is high,” it added. “We believe it is unlikely that external and fiscal support will improve sufficiently over the next two to three years to meaningfully augment support for the sovereign ratings.”