arkymede74
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Portafogli e Strategie (investimento) Investment Grade, entro le frontiere conosciute. (4 lettori)
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waltermasoni
Caribbean Trader
Fitch Affirms Philippines at 'BBB'; Outlook Stable
17 JUL 2018 9:00 PM ET
Fitch Ratings-Hong Kong-17 July 2018: Fitch Ratings has affirmed the Philippines' Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB' with a Stable Outlook.
A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
The Philippines' sovereign ratings balance a favourable growth outlook, government debt levels that are below peer medians, a net external creditor position and policies geared towards maintaining macrostability against lower income per capita and weaker governance and business environment indicators compared with its rating category peers.
Strong macroeconomic performance remains a rating strength, notwithstanding overheating risks. Real GDP expanded by 6.8% in 1Q18 from 6.7% in 2017, supported by strong growth in investment and private consumption. Growth in investment was driven by a pick-up in the public-infrastructure programme. We expect domestic demand to maintain strong growth of 6.8% in both 2019 and 2020, which would maintain the Philippines' place among the fastest-growing economies in the Asia-Pacific region. The Philippines' estimated five-year average real GDP growth of 6.5% at end-2018 will remain far above the current 'BBB' median of 3.1%. However, the agency believes the economy faces some overheating risks, evident from a recent rise in inflation, rapid credit growth and a widening trade deficit, although steps taken by the Bangko Sentral ng Pilipinas (BSP) to tighten monetary policy may contain these risks.
Headline inflation increased to 4.3% yoy in 1H18 from 2.9% in 2017. Fitch expects consumer price inflation to average around 4.4% in 2018, above the BSP's official band of 2%-4%, due in large part to higher commodity prices and a recent increase in excise taxes associated with the tax reform package passed at the end of last year. The one-off impact of the tax hikes is likely to dissipate in 2019, and therefore we expect average inflation to fall to around 3.8% in 2019. The central bank has raised policy rates by a cumulative 50bp so far in 2018 to contain inflationary pressures.
We expect the Philippines' current account deficit to widen to -1.1% of GDP in 2018 from -0.8% of GDP in 2017, driven by continued strong growth in the import of capital goods associated with the government's public-investment programme and higher oil prices. The business-process outsourcing sector's continued strong receipts and steady remittance inflows are offsetting these factors and helping to contain a further widening of the current account deficit. We expect the deficit to widen further to around -1.3% of GDP in 2019 and 2020. Risks to this outlook stem from a further acceleration of imports.
Foreign direct investment (FDI) inflows rose to USD10.0 billion in 2017 from USD8.3billion in 2016. Approved FDI investments declined from a year ago but realised FDI inflows rose by around 43.5% yoy in 1Q18 to USD2.2 billion, reflecting still-strong foreign investor sentiment.
High foreign-exchange reserves continue to act as an important buffer to external shocks. Foreign-exchange reserves had fallen to USD77.7 billion by end-June 2018 from USD81.6 billion at end-2017 due to portfolio outflows and intervention by the BSP. However, reserves continue to cover around seven months of current external payments (CXP). In addition, the BSP's flexible exchange-rate policy, evident from a depreciation of the peso by around 6% against the US dollar over the past year, should prevent a sharp decline in reserves. We forecast reserve coverage of CXP to remain at close to seven months in 2019 and 2020 and expect the Philippines to retain its strong net external creditor position. We estimate its net external creditor position will be around -11% of GDP at end-2018 compared with the equivalent net debtor position of 6.2% of the current 'BBB' median.
The exchange rate has remained under downward pressure so far in 2018. We think downside risks to the exchange rate remain due to tighter global monetary conditions and a persistent current account deficit. However, compared with other countries in the region, the Philippines' vulnerability to capital outflows is modest because of a low share of non-resident holdings of domestic debt securities and limited foreign participation in the equity market. For example, foreign investors hold less than 6% of local government securities.
Tax package 1A, the key revenue-raising component of the first of a five-part tax-reform drive to be implemented over the coming years, came into effect at the beginning of 2018. Its key elements include a lowering of personal-income taxes and hikes in excise taxes on petroleum, tobacco and automobiles and the introduction of excise taxes on sugar-sweetened beverages and cosmetics.
Fitch expects central government revenue to improve to 16.2% of GDP in 2018 and 16.7% in 2019 from 15.6% in 2017. The revenue improvement should help preserve fiscal stability as government expenditure increases under the planned public-investment programme, which aims to raise the government's capital expenditure to 7.3% of GDP by 2022 from 6.1% in 2018. We therefore expect the budget deficit to stabilise at around -3% of GDP in 2019 and 2020 and gross general government debt to decline to around 35.4% of GDP in 2020 from 35.9% of GDP in 2018.
The passage of tax package 1A signals the authorities' commitment to reform. Authorities expect package 2 to be passed by the year-end. It includes a lowering of corporate income taxes and rationalisation of certain tax incentives and is designed to be revenue neutral.
The impact on the Philippines' fiscal balances of a recent Supreme Court ruling requiring increased transfers from the central to local government units remains unclear given the uncertainty over the precise timing and content of the ruling. However, based on our preliminary assessment, the ruling could put upward pressure on the general government debt ratio, as well as creating challenges for effective public-finance management.
The Philippines continues to lag peers on some structural metrics, notwithstanding strong GDP growth. It is less developed on metrics such as GDP per capita, standards of human development and governance. The Philippines ranks in the 40th percentile on the World Bank's latest governance indicators compared with the 57th percentile of the current 'BBB' median.
Banking sector indicators remain sound. The sector as a whole remains well-capitalised and liquid, with an average common equity Tier 1 ratio of around 12.7% for the top 10 banks at end-1Q18, and a system loan/deposit ratio of about 76% as of end-May 2018. Robust GDP growth and generally prudent lending standards continue to support asset quality, and the system's non-performing loan ratio remains benign at around 1.9% of gross loans as of end-May 2018. Strong economic activity has contributed to a prolonged period of rapid credit expansion. System loans have risen at almost twice the rate of nominal GDP, on average, over the last five years - and continued to grow briskly at 16.3% yoy in May 2018. For now, aggregate measures do not indicate severe risks of over-leverage. Banking system credit remains moderate at close to 50% of GDP, and though some borrowers are more highly geared than others, we expect growing corporate earnings and income levels to continue to support debt-servicing capacity in general.
17 JUL 2018 9:00 PM ET
Fitch Ratings-Hong Kong-17 July 2018: Fitch Ratings has affirmed the Philippines' Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB' with a Stable Outlook.
A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
The Philippines' sovereign ratings balance a favourable growth outlook, government debt levels that are below peer medians, a net external creditor position and policies geared towards maintaining macrostability against lower income per capita and weaker governance and business environment indicators compared with its rating category peers.
Strong macroeconomic performance remains a rating strength, notwithstanding overheating risks. Real GDP expanded by 6.8% in 1Q18 from 6.7% in 2017, supported by strong growth in investment and private consumption. Growth in investment was driven by a pick-up in the public-infrastructure programme. We expect domestic demand to maintain strong growth of 6.8% in both 2019 and 2020, which would maintain the Philippines' place among the fastest-growing economies in the Asia-Pacific region. The Philippines' estimated five-year average real GDP growth of 6.5% at end-2018 will remain far above the current 'BBB' median of 3.1%. However, the agency believes the economy faces some overheating risks, evident from a recent rise in inflation, rapid credit growth and a widening trade deficit, although steps taken by the Bangko Sentral ng Pilipinas (BSP) to tighten monetary policy may contain these risks.
Headline inflation increased to 4.3% yoy in 1H18 from 2.9% in 2017. Fitch expects consumer price inflation to average around 4.4% in 2018, above the BSP's official band of 2%-4%, due in large part to higher commodity prices and a recent increase in excise taxes associated with the tax reform package passed at the end of last year. The one-off impact of the tax hikes is likely to dissipate in 2019, and therefore we expect average inflation to fall to around 3.8% in 2019. The central bank has raised policy rates by a cumulative 50bp so far in 2018 to contain inflationary pressures.
We expect the Philippines' current account deficit to widen to -1.1% of GDP in 2018 from -0.8% of GDP in 2017, driven by continued strong growth in the import of capital goods associated with the government's public-investment programme and higher oil prices. The business-process outsourcing sector's continued strong receipts and steady remittance inflows are offsetting these factors and helping to contain a further widening of the current account deficit. We expect the deficit to widen further to around -1.3% of GDP in 2019 and 2020. Risks to this outlook stem from a further acceleration of imports.
Foreign direct investment (FDI) inflows rose to USD10.0 billion in 2017 from USD8.3billion in 2016. Approved FDI investments declined from a year ago but realised FDI inflows rose by around 43.5% yoy in 1Q18 to USD2.2 billion, reflecting still-strong foreign investor sentiment.
High foreign-exchange reserves continue to act as an important buffer to external shocks. Foreign-exchange reserves had fallen to USD77.7 billion by end-June 2018 from USD81.6 billion at end-2017 due to portfolio outflows and intervention by the BSP. However, reserves continue to cover around seven months of current external payments (CXP). In addition, the BSP's flexible exchange-rate policy, evident from a depreciation of the peso by around 6% against the US dollar over the past year, should prevent a sharp decline in reserves. We forecast reserve coverage of CXP to remain at close to seven months in 2019 and 2020 and expect the Philippines to retain its strong net external creditor position. We estimate its net external creditor position will be around -11% of GDP at end-2018 compared with the equivalent net debtor position of 6.2% of the current 'BBB' median.
The exchange rate has remained under downward pressure so far in 2018. We think downside risks to the exchange rate remain due to tighter global monetary conditions and a persistent current account deficit. However, compared with other countries in the region, the Philippines' vulnerability to capital outflows is modest because of a low share of non-resident holdings of domestic debt securities and limited foreign participation in the equity market. For example, foreign investors hold less than 6% of local government securities.
Tax package 1A, the key revenue-raising component of the first of a five-part tax-reform drive to be implemented over the coming years, came into effect at the beginning of 2018. Its key elements include a lowering of personal-income taxes and hikes in excise taxes on petroleum, tobacco and automobiles and the introduction of excise taxes on sugar-sweetened beverages and cosmetics.
Fitch expects central government revenue to improve to 16.2% of GDP in 2018 and 16.7% in 2019 from 15.6% in 2017. The revenue improvement should help preserve fiscal stability as government expenditure increases under the planned public-investment programme, which aims to raise the government's capital expenditure to 7.3% of GDP by 2022 from 6.1% in 2018. We therefore expect the budget deficit to stabilise at around -3% of GDP in 2019 and 2020 and gross general government debt to decline to around 35.4% of GDP in 2020 from 35.9% of GDP in 2018.
The passage of tax package 1A signals the authorities' commitment to reform. Authorities expect package 2 to be passed by the year-end. It includes a lowering of corporate income taxes and rationalisation of certain tax incentives and is designed to be revenue neutral.
The impact on the Philippines' fiscal balances of a recent Supreme Court ruling requiring increased transfers from the central to local government units remains unclear given the uncertainty over the precise timing and content of the ruling. However, based on our preliminary assessment, the ruling could put upward pressure on the general government debt ratio, as well as creating challenges for effective public-finance management.
The Philippines continues to lag peers on some structural metrics, notwithstanding strong GDP growth. It is less developed on metrics such as GDP per capita, standards of human development and governance. The Philippines ranks in the 40th percentile on the World Bank's latest governance indicators compared with the 57th percentile of the current 'BBB' median.
Banking sector indicators remain sound. The sector as a whole remains well-capitalised and liquid, with an average common equity Tier 1 ratio of around 12.7% for the top 10 banks at end-1Q18, and a system loan/deposit ratio of about 76% as of end-May 2018. Robust GDP growth and generally prudent lending standards continue to support asset quality, and the system's non-performing loan ratio remains benign at around 1.9% of gross loans as of end-May 2018. Strong economic activity has contributed to a prolonged period of rapid credit expansion. System loans have risen at almost twice the rate of nominal GDP, on average, over the last five years - and continued to grow briskly at 16.3% yoy in May 2018. For now, aggregate measures do not indicate severe risks of over-leverage. Banking system credit remains moderate at close to 50% of GDP, and though some borrowers are more highly geared than others, we expect growing corporate earnings and income levels to continue to support debt-servicing capacity in general.
waltermasoni
Caribbean Trader
waltermasoni
Caribbean Trader
a parte “ i soli 200 k “dico che e’ un bond subordinato di una banca italiana con scadenza lunga.se proprio vuoi subordinati in dollari vai a comprare sub americani che hanno anche tagli bassi
marcob77
Moderator
Ti ringrazio, il fatto è che la mia conoscenza in sistema bancario americano è pressochè nulla. Le normative su eventuali fallimenti sono come quelle italiane (a parte che probabilmente non hanno la brrd..)