Moody’s Ratings affirmed the Philippines’ long-term local and foreign currency issuer and senior unsecured ratings at Baa2, maintaining a stable outlook. The decision, announced on Monday, applies to the government’s 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 country’s local and foreign currency country ceilings were also left unchanged at A1 and A2, respectively. Moody’s expects fiscal metrics to stabilize over the next two years, supported by a gradual economic recovery from the current cyclical slowdown and ongoing fiscal consolidation efforts.
The rating agency highlighted the Philippines’ strong access to domestic and international funding markets, along with sufficient foreign-currency reserves to manage global capital flow volatility. However, it noted persistent challenges including deteriorating debt affordability, institutional quality constraints, low income levels, and high exposure to physical climate risks.
Near-term growth has slowed due to elevated food and energy prices stemming from the Middle East conflict, compounded by a sluggish recovery in public investment following a flood-control probe. Cautious business sentiment amid high costs has further constrained private investment.
Moody’s warned that risks to the stable outlook include a prolonged economic slowdown, pre-election spending pressures ahead of the 2028 election, slower reform momentum, or debt affordability deterioration beyond baseline expectations.
