Bangko Sentral ng Pilipinas (BSP) officials are confident that the Philippine credit rating is due for an upgrade on the back of continued strong external position, manageable debt burden and recalibrated tax collection and borrowing programs to bring down the budget deficit.

BSP Deputy Governor Diwa C. Guinigundo said based on central bank studies and assessments, credit grades or rating on Philippine sovereign bonds (ROPs) are two to three notches lower than what market ratings actually are.

"We're two to three notches underated (so) we're optimistic," Guinigundo told reporters last Friday.

"We're due for a credit rating upgrade," BSP Assistant Governor Cyd Tuano-Amador also announced over the weekend.

According to Guinigundo, "We have better macrofundamentals than some higher rated jurisdictions and the market has actually taken this into account. This is shown by our tight debt and CDS (credit default swaps) spreads." Based on a BSP report, sovereign debt spreads have generally widened in the second quarter of the year but have tightened against levels a year ago.

The declining National Government debt to GDP ratio is one of the "winnable" factors in the credit rating improvement, said Tuano-Amador. "The fact that we've never reneged on our debt payments is also a (plus) for us," she added.

ROPs are currently rated "Ba3" by Moody’s, "BB-" by Standard & Poor’s, and "BB" by Fitch.

All three credit rating agencies have maintained a "stable" credit rating outlook for Philippine debt notes. A stable outlook means the credit rating is good for 12 to 24 months. In the meantime an upgrade would significantly reduce the cost of borrowing, which is significant since the Philippines is considered Asia's most active debt paper borrower.

Both monetary and finance officials have expressed confidence that S&P and Fitch will upgrade credit ratings. The rating agencies have just concluded its annual review of the Philippine economic situation.