กรุงเทพฯ--5 มิ.ย.--Standard & Poor's
Standard & Poor's Ratings Services said today that its '3' recovery rating (representing 50%-70% recovery in net present value terms) on the Republic of Philippines' foreign currency debt remained unchanged following the government's second issuance of debt-exchange warrants. At the same time, Standard & Poor's affirmed its 'BB-' long-term foreign currency and issue level ratings, its 'BB+' long-term local currency rating, and its 'B' short-term foreign and local currency sovereign ratings on the Philippines. In addition, the 'BB+' transfer and convertibility assessment on the sovereign is affirmed. The outlook on both the foreign and local currency ratings is stable.
The new debt-exchange warrants being issued by the Philippine government have a notional amount of US$2.25 billion. These warrants refer to eligible foreign currency bonds maturing between 2017 and 2032, amounting to a face value of US$10 billion. They follow an initial issue in February 2008 of warrants with a notional amount of US$2 billion referring to eligible foreign currency bonds with a face value of US$11 billion, with tenors up to 10 years.
In the event of a government default on the eligible bonds, the warrants grant the right, but not the obligation, to exchange the defaulted foreign currency bond against a local currency government bond at the currency exchange rate prevailing post-default.
"We do not believe that the issuance of these debt-exchange warrants, in their current volume, provides an incentive for the government to offer different terms on default on eligible foreign currency bonds that are not paired with a warrant versus ineligible foreign currency government bonds," said Standard & Poor's credit analyst Christian Esters. "Should issuance of debt-exchange warrants increase to more significant levels, however, Standard & Poor's would consider that the foreign currency recovery prospects could be harmed, particularly on those eligible bonds that are not paired with a warrant."
Under a foreign currency default scenario in which many of the debt exchange warrants are exercised, the government's incentives to offer restructuring terms with high recovery values to creditors of the rump foreign currency debt might be diminished below a level consistent with a '3' recovery rating.
Ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. It can also be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Credit Ratings Search. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office Hotline (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4017. Members of the media may also contact the European Press Office via e-mail on: media_europe@standardandpoors.com.
Media Contact:
David Wargin, New York (212) 438-1579
david_wargin@standardandpoors.com
Analyst Contacts:
Christian Esters, CFA, Frankfurt (49) 69-33-999-242
Agost Benard, Singapore (65) 6239-6347