Thursday, March 28, 2013

Philippines Receives Investment Grade Credit Rating for the First Time Ever


Yesterday, Fitch Ratings upgraded the credit rating of the Philippines to "investment grade," from "BB+" to "BBB-".

How did we react to the news? First, by giving each other virtual pats-on-the-backs and high fives.

Good job
Second, by buying stocks like crazy, leading to a 2.74% rise in the PSEi, ~5% price increases for "blue chip" stocks, and more than half of "top losers" being in the green.

But what does the credit rating upgrade really mean for the ordinary Filipino? The Rappler sums it up pretty nicely with this infographic.

One thing we have to watch out for is how fast banks and other financial institutions will adjust interest rates on consumer and household debt. If memory serves me right, they're too slow.

So yeah, the upgrade tells us that there are plenty of reasons to be excited and optimistic. We just have to try to be not too excited and optimistic.

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