A STRONGER dollar has increased foreign-exchange risks for some rated Philippine companies, Moody’s said, but the overall credit quality of major corporates remains resilient due to strong financial buffers and hedging strategies.
“US dollar strength will weigh on the credit quality for a subset of rated companies with structural currency mismatches, but overall credit strength across South and Southeast Asia will remain stable over the next 12–18 months,” Moody’s Ratings said in a report on Monday.
It noted that currency depreciation across the region accelerated through 2025 and into 2026 amid war in the Middle East, higher oil prices, US tariffs and foreign capital outflows. Among the most affected were the Indonesian rupiah, Indian rupee, and Philippine peso, all of which depreciated by roughly 10 to 12 percent.
“The credit effects of currency depreciation reflect differences in revenue and cost currency profiles,” Moody’s said, noting that companies with substantial dollar liabilities but local-currency revenues face the greatest vulnerability.
Despite the challenging environment, Moody’s said most rated companies in the region remained well-positioned to withstand further currency weakness.
It reviewed 41 rated companies in India, Indonesia and the Philippines, the three countries that experienced the steepest currency depreciation.
Only seven firms, or 17 percent of those assessed, were found to be materially exposed to the effects of record dollar strength. The remaining 83 percent either have limited foreign-exchange exposure or possess sufficient financial and operational safeguards to absorb additional currency pressures.
For the Philippines, Moody’s identified only two rated companies as significantly exposed to a stronger dollar: Philippine Airlines Inc. (PAL) and First Pacific Co. Ltd.
PAL was said to be one of the most vulnerable because the majority of its liabilities and operating expenses were tied to the US currency.
The flag carrier was said to carry approximately $1.8 billion in debt, including around $1.4 billion in aircraft lease liabilities and asset-backed securities, that are mostly denominated in dollars.
At the same time, jet fuel — one of the airline’s largest expenses, accounting for about 31 percent of operating costs — is also priced in dollars.
“The company does not hedge fuel costs, leaving it exposed to volatility in both oil prices and exchange rates,” Moody’s said.
Nevertheless, the debt watcher said PAL benefits from natural hedges that help mitigate these pressures.
Around 35 percent of its revenues are earned directly in dollars through international operations. Through settlement arrangements with banks in multiple countries, its effective dollar-linked revenue rises to approximately 45 percent of total revenues. The airline also regularly converts a portion of its peso earnings into dollars to support its liquidity position.
Moody’s noted that more than 75 percent of PAL’s $591 million in cash holdings were held in dollars as of the first three months of the year, providing an additional buffer against currency volatility.
“The company’s US dollar reporting currency also eliminates mark-to-market foreign exchange volatility on its lease liabilities,” it said.
The second Philippine-linked company identified by Moody’s is Hong Kong-listed conglomerate First Pacific, whose portfolio includes major interests in telecommunications, infrastructure and consumer businesses across the Philippines and Indonesia.
First Pacific was said to be vulnerable to currency fluctuations because it relies heavily on dividend flows from operating subsidiaries located in countries whose currencies have weakened against the dollar.
These subsidiaries include PLDT, Metro Pacific Investments Corp., and Indonesia-based food giant Indofood.
At the holding-company level, meanwhile, First Pacific has approximately $1.5 billion in debt, with all borrowings denominated in US dollars.
A weaker peso and rupiah can reduce the dollar value of dividends remitted from subsidiaries, potentially affecting the holding company’s ability to service debt obligations.
“While First Pacific receives meaningful dividends from PacificLight Power, a Singapore-based power generator, we expect a substantial portion of this dividend to be reinvested as equity contributions to fund PLP’s expansion over the next two years,” Moody’s said.
