Moody's Investors Service affirmed the Philippines' long-term local and foreign currency issuer and senior unsecured ratings at Baa2 or two steps above investments grade on Thursday.

Based on the outlook, the Philippine situation remains stable. The rating action is driven by Moody's view that the challenging global credit conditions will not derail the Philippines' ongoing recovery from the coronavirus pandemic, although the severity of the pandemic shock has led to an erosion in the rating agency's assessment of economic strength.

Moreover, continued policy orthodoxy and commitment to reform amid political transition will help to assure gradual fiscal repair following the reversal of the strengthening of the government's fiscal and debt metrics resulting from the pandemic.

Fundamentals strong

Moody's said the Philippines has also retained fundamental strength with regards to the stability of its banking system and government's capacity to meet external debt repayments, notwithstanding cyclical pressures on the balance of payments and consequent exchange rate depreciation.

Moreover, Moody's has also affirmed the government's foreign currency senior unsecured shelf rating at (P)Baa2 and the senior unsecured ratings for the liabilities of the country's central bank, Bangko Sentral ng Pilipinas at Baa2.

In Moody's view, the BSP's credit quality is closely aligned with that of the government.

The Philippines' local and foreign currency country ceilings are unchanged at A1 and A2, respectively.