Moody’s Investors Service on Monday affirmed the Philippines’ long-term local and foreign currency issuer and senior unsecured ratings at Baa2, maintaining a stable outlook. The ratings agency also affirmed the foreign currency senior unsecured shelf rating at (P)Baa2, the ROP Sukuk Trust’s backed senior unsecured rating at Baa2, and the Bangko Sentral ng Pilipinas’ senior unsecured ratings at Baa2, all with stable outlooks.
The Philippines’ local and foreign currency country ceilings were left unchanged at A1 and A2, respectively. Moody’s noted that the country’s fiscal metrics are expected to stabilize over the next two years, despite near-term growth pressures.
The rating agency highlighted several strengths supporting the affirmation, including strong access to domestic and international funding markets, sufficient foreign-currency reserves to manage global capital flow volatility, ongoing government fiscal consolidation efforts, and a gradual economic growth recovery. However, Moody’s also pointed to key risks, such as deteriorating debt affordability, institutional quality constraints, low income levels, and high exposure to physical climate risks.
Near-term economic challenges cited by Moody’s include a substantial slowdown in growth, driven by higher food and energy costs following the Middle East conflict, a slow recovery in public investment after a flood-control probe, cautious business sentiment amid elevated prices and uncertainty, and limited private investment. The rating agency also noted that pre-election spending pressures could emerge ahead of the 2028 election.
Moody’s warned that a more prolonged slowdown, slower reform momentum, or debt affordability deterioration beyond baseline expectations could pose downside risks to the ratings.
