THE DEVELOPMENT Bank of the Philippines (DBP) has received a credit rating upgrade from S&P Global Ratings, reflecting the climb in the country’s debt rating.
S&P on Thursday raised the long-term issuer credit rating of the state-run lender to “BBB+” from “BBB,” two notches above the minimum investment grade, and assigned a “stable” outlook. The credit rater also affirmed DBP’s short-term rating at “A-2.”
“We raised the rating on DBP following a similar upgrade in the sovereign credit rating on the Philippines,” S&P said in the statement.
The debt watcher raised the country’s credit rating by a notch to “BBB+,” citing above-average growth and strong external and fiscal position which have boosted the country’s economic profile.
This brings the country’s rating a step closer to bagging a single “A” grade, putting its assessment of the Philippines a step higher than those of its peers: Fitch Ratings’ “BBB” and Moody’s Investors Service’s “Baa2.”
S&P said the Philippine government is “almost certain” to provide “timely and sufficient extraordinary support” to DBP if needed.
“Our assessment of government support reflects the government’s history of capital support and sovereign guarantees for DBP’s external borrowing,” the debt watcher said.
DBP, the eighth-largest bank in the country in asset terms, is mandated to act as the country’s development lender, financing infrastructure program by lending primarily to local government units, water districts, electric cooperatives, other corporates as well as micro-, small- and medium-sized businesses.
“In supporting the government’s social and economic development agenda, DBP undertakes a wide range of projects that cannot be pursued on a commercial basis,” the debt watcher added.
S&P also expects the bank to “remain an important instrument” for the state’s medium-term development strategy, as it is seen to sustain its public policy role over the next two years.
“Any significant change in government policy that affects DBP’s critical role or integral link will affect the ratings on the bank, which we view as unlikely over the next two years.”
DBP booked a P5.72-billion net income in 2018, up 4.2% from P5.49 billion booked a year ago, driven by growth in lending as well as deposit collection, particularly in the rural areas. — K.A.N. Vidal