GLOBAL credit rating agency Moody’s Corp. has agreed to acquire a minority stake in Philippine Rating Services Corp. (PhilRatings), deepening its presence in the Philippine debt market as the country seeks to expand domestic sources of financing.
“Strong domestic debt markets are essential to supporting sustainable economic growth,” Moody’s Ratings Managing Director and Regional Head of Asia Pacific Wendy Cheong said in a statement.
“PhilRatings has built deep insight into the local market, and its ratings serve as a strong complement to Moody’s global views on credit for investors in the Philippines,” Cheong added.
The investment makes Moody’s Ratings the first global credit rating agency to invest in a domestic credit rating agency in the Philippines. The transaction will also expand Moody’s network of domestic rating agency affiliates in the Asia-Pacific.
The financial terms of the transaction were not disclosed.
PhilRatings, headquartered in Manila, will continue to operate independently following the investment, retaining its own management, governance structure, and credit rating processes, according to Moody’s.
The investment comes as the Philippines continues to develop its domestic debt capital market, which could provide companies and infrastructure projects with additional sources of funding amid the country’s large investment requirements.
“Strong domestic debt markets are essential to supporting sustainable economic growth,” Wendy Cheong, managing director and regional head of Asia-Pacific at Moody’s Ratings, said.
Cheong said PhilRatings had developed deep knowledge of the local market, adding that its ratings complement Moody’s global views on credit for investors in the Philippines.
Moody’s noted that outstanding domestic corporate bonds in the Association of Southeast Asian Nations (Asean) are more than twice the size of cross-border holdings.
The rating agency also pointed to the Philippines’ more than $100 billion in planned infrastructure investment over the next three years, underscoring the potential for the domestic debt market to support the country’s financing needs.
As the local bond market expands, Moody’s said credit ratings and research would become increasingly important in helping issuers access new sources of capital, develop funding strategies, and provide greater transparency to investors.
For Philippine companies, a deeper domestic bond market could offer an alternative to bank financing and help diversify funding sources, particularly for large capital-intensive projects.
PhilRatings President Angelica Viloria said Moody’s global standards, best practices, and technical support would help strengthen the country’s credit market infrastructure.
“Moody’s Ratings’ global standards, best practices and technical support will help us advance our mission to strengthen the credit market infrastructure in the Philippines,” Viloria said.
She added that Moody’s position as a minority stakeholder would reinforce PhilRatings’ commitment to trust, credibility and high-quality credit ratings and research for the Philippine market.
PhilRatings has been operating as a domestic credit rating agency for decades and is recognized by Philippine regulators for its rating activities. Its ratings are used in the local capital market, including for securities listed on the Philippine Dealing and Exchange Corp., according to information on the company.
The investment also comes shortly after Moody’s affirmed the Philippines’ Baa2 investment-grade sovereign credit rating with a stable outlook in August, indicating that the country continues to maintain access to investment-grade financing despite challenges to growth and fiscal conditions.
Moody’s said its investment in PhilRatings would not change the latter’s independence.
PhilRatings will continue to have its own management, governance and credit rating processes, separating its domestic rating operations from Moody’s global credit rating activities.
