DOF calls for credit upgrade, says RP deserving The Department of Finance said the Philippines deserves a credit rating higher than the current two to three notches below investment grade. According to the DOF, the current ratings “are no longer reflective of the actual confidence of the international credit market” given the country’s improving macroeconomic fundamentals. The Philippines is rated three notches below investment grade by Moody’s Investors Service and Standard & Poor’s, and two notches below investment grade by Fitch Ratings. All three, however, have assigned a “stable” outlook on the Philippines, indicating that so far, there are no threats of a credit-rating downgrade. The outlook is backed partly by the country’s rising dollar reserves, which have recently breached the $50-billion mark. In an interview, Finance Undersecretary Gil Beltran noted that spreads on sovereign bonds of the Philippines were tighter than those for bonds issued by some developing Asian countries with better credit ratings. “Our bonds are rated 30 to 55 basis points lower than those for Indonesia. The borrowers are giving us better ratings than the credit rating firms themselves,” Beltran said in an interview. Although ratings firms supposedly assess credit standing of issuers to guide investors in their investment decisions, Beltran said investors were giving a better assessment of the Philippines, even without the backing of credit ratings. He noted that the recently issued peso-denominated global bonds, which fetched an interest rate of 5 percent at the primary issuance, are now being traded in the secondary market for around 4.4 percent. Major international credit-rating firms, however, still consider debt instruments from the Philippines speculative. Ratings firms have said that while some of the country’s macroeconomic fundamentals are improving—such as the GIR and the gross domestic product—the country’s debt remains high at over 50 percent of the country’s GDP. Reducing the debt-to-GDP ratio, they said, would make it easier for the country to get a more favorable credit rating. The last time the Philippines got a rating upgrade was in July last year, when Moody’s raised its credit rating for the country by a notch. |
Most U.S. Stocks Gain on Bets Fed Will Act to Stimulate Economy Most U.S. stocks climbed, as trading volume sank to the lowest level of the year, amid growing speculation that the Federal Reserve will pump more cash into the economy to protect the recovery. Boeing Co., JPMorgan Chase & Co. and International Business Machines Corp. rose more than 0.5 percent, leading gains in the Dow Jones Industrial Average. Gymboree Corp. surged 22 percent after Bain Capital LLC agreed to buy the children’s clothing retailer agreed for about $1.8 billion. Tyson Foods Inc. fell for a second day amid concern its feed costs will rise. In the Standard & Poor’s 500 Index, 268 companies rose and 224 fell at 4 p.m. New York time. The measure increased less than 0.1 percent to 1,165.32. The Dow advanced 3.86 points, or less than 0.1 percent, to 11,010.34. Trading volume on U.S. exchanges amounted to 5.62 billion shares. “The Federal Reserve has made it very clear that they are intent on supporting the markets and that has set a floor,” said Oliver Pursche, co-manager of the GMG Defensive Beta Fund and president of Suffern, New York-based Gary Goldberg Financial Services, which manages $500 million. U.S. stocks rallied last week, sending the Dow average above 11,000 for the first time since before the May 6 crash, after a report showed the economy created fewer-than-estimated private jobs in September, bolstering speculation the Fed will buy more debt to boost the economy. The S&P 500 rose 8.8 percent last month, its best September since 1939, as the central bank said it’s willing to ease monetary policy further. |
Crude Oil Futures Decline in N.Y. as Dollar Strengthens Against Euro, Yen Crude oil dropped, snapping a three- week rally that took prices to the highest levels since May, as the dollar strengthened against the euro and the yen, curbing the appeal of commodities as an alternative investment. Oil fell as the dollar rose from an eight-month low against the euro and a 15-year low to the yen. The currency retreated earlier on speculation that the Federal Reserve will signal it’s willing to buy more government debt to spur economic growth. Petroleum supplies were near their highest level in 20 years. “The market’s not that strongly supported by fundamentals, so people are watching things like the currency,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The dollar’s still low, but maybe people think we’re close to the bottom.” Crude for November delivery lost 45 cents, or 0.5 percent, to settle at $82.21 a barrel on the New York Mercantile Exchange. Prices increased 1.3 percent last week in the third consecutive weekly gain, the longest stretch since June. Futures have risen 15 percent in the past year. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
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