Fitch gives Philippines bond BB

Fitch Ratings said it assigned the Republic of the Philippines' $1 billion bond a long-term foreign currency BB rating.

Fitch said it revised the outlook on the Philippines' sovereign ratings (long-term foreign currency BB/long-term local currency BB+) to negative from stable on July 10, following the issuance of a temporary restraint by the Supreme Court on the expanded value added tax (eVAT).

At the time, the agency also said it noted that the political turmoil surrounding President Arroyo's possible impeachment was likely to prove detrimental to economic performance and the economic policy environment.

"While the eVAT and the impeachment issue have both been resolved favorably in recent days, we are maintaining our negative outlook on the Philippines' ratings," said James McCormack, head of Asia sovereigns at Fitch.

"The delayed eVAT detracted from the overall credibility of the fiscal reform program and we will wait until the eVAT is implemented fully, including the rate increase from 10% to 12% scheduled for January 2006, before considering its positive effects on government revenues."

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