The Philippines has finally reached “investment grade” status.
The recent decisions by Fitch Ratings, Standard & Poor’s (S&P), and
Moody’s to upgrade the country’s sovereign credit rating grabbed news
headlines. What does this mean for the government, the economy, and business?
More importantly, what is in store for the ordinary Filipino struggling to make
a living?
In a nutshell, credit ratings represent assessments by credit rating agencies (CRAs) on the risk that a borrower (in our case, a sovereign nation, the Republic of the Philippines) would default on its debts. Governments and firms need to get a credit rating to raise funds from bonds, and ratings influence borrowing costs.
Financial regulators also look at credit ratings to enforce
capital standards. Investors, meanwhile, depend on credit ratings to determine
which financial instruments are safe bets. For instance, big US pension funds
invest only in investment-grade securities to protect their retirees.
In a nutshell, credit ratings represent assessments by credit rating agencies (CRAs) on the risk that a borrower (in our case, a sovereign nation, the Republic of the Philippines) would default on its debts. Governments and firms need to get a credit rating to raise funds from bonds, and ratings influence borrowing costs.
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| Table from the Reuters blog |
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