S&P cuts Russia's ratings to 'CC' on debt default risk

S&P on Thursday lowered its long-term sovereign credit rating on Russia to "CC" from "CCC-", as the country reported difficulties meeting debt-service payments on the due date on its US dollar-denominated 2023 and 2043 Eurobonds.

"Although public statements by the Russian Ministry of Finance suggest to us that the government currently still attempts to transfer the payment to the bondholders, we think that debt service payments on Russia's Eurobonds due in the next few weeks may face similar technical difficulties," the ratings agency said.

-reuters-

Moody’s affirms Philippines’ Baa2 rating, keeps 'stable' outlook

MANILA - Moody’s Investors Service has affirmed the Philippines’ credit rating of “Baa2” with a “stable” outlook, the Bangko Sentral ng Pilipinas said Thursday.

Baa2 is one notch above minimum investment grade, while the stable outlook means neither an upgrade nor downgrade is forthcoming.

Last May, Fitch Ratings and S&P Global also affirmed the country’s BBB and BBB+ ratings, respectively, both with a stable outlook.

The BSP said the rating was a vote of confidence on the ability of the economy to cushion the effects of COVID-19 and to post a solid recovery over the near term.

The central bank noted that the affirmation of the Philippines' credit rating comes amid a series of credit rating downgrades and negative outlook revisions by Moody’s worldwide.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Philippines entered the COVID-19 crisis in a position of strength, with healthy external accounts, sound and stable banking system, and manageable inflation.

“Complementing these buffers are the prompt, decisive, and extraordinary measures implemented by the BSP and the National Government to save lives and livelihoods, and to make sure we emerge from this crisis stronger than before,” Diokno said.

Moody’s said the improvement of the government’s fiscal position in recent years provides a buffer against a rise in public indebtedness due to shocks such as the COVID-19 pandemic.

“Relatedly, the track record of prudent economic and fiscal management, and a robust banking system, contribute to the stable access to funding at moderate costs and support prospects for fiscal consolidation and debt stabilization after the shock subsides,” Moody’s said.

Finance Secretary Carlos Dominguez III said the country has “ample buffers” to cushion the fallout from COVID-19 while keeping debt levels manageable and without compromising fiscal health.

"On the back of such strong fundamentals, the Duterte administration is committed to a calibrated reopening of the domestic economy in order to quickly restore business and consumer confidence while holding on to certain mobility restrictions and strict health protocols meant to further slow COVID-19 spread, save lives and protect communities," he added.

Moody’s projects the Philippine economy to contract by 4.5 percent this year due to the disruptions from the pandemic. But the debt watcher expects the economy to rebound with a 6.5 percent growth in 2021, followed by 6 percent in the succeeding years.

The recovery projection comes on the back of favorable demographics and improving investment climate, Moody’s said.

news.abs-cbn.com

Moody's keep South Africa's credit rating unchanged

JOHANNESBURG - International credit rating firm Moody's has left South Africa's sovereign debt grading unchanged two notches above junk status, but warned Saturday of a possible future downgrade if reforms to support growth fail to materialize.

Moody's rates Africa's most developed economy as Baa2 -- meaning it is of investment grade for banks -- albeit with a negative outlook.

Instead of the much anticipated formal review of South Africa's credit rating, Moody's issued an updated credit opinion overnight, warning that the negative outlook remained because of political tensions and weak growth.

"The negative outlook on South Africa's Baa2 government bond rating reflects risks related to the implementation of structural reforms aimed at restoring confidence and encouraging investment," it said in a statement released early Saturday.

It added that the country's political scene continued to be "noisy" but that key institutions remained resilient.

One of the credit challenges for South Africa is "protracted political infighting that generates policy uncertainty and impedes structural reforms," it said.

On Friday, another international credit rating firm, Fitch, dropped its outlook for South Africa from stable to negative, citing the country's recent political turmoil under President Jacob Zuma.

Zuma has been engulfed by graft scandals and a power struggle with Finance Minister Pravin Gordhan, while economic growth has fallen to 0.5 percent and unemployment hit a 13-year high.

Moody's warned that South Africa's rating "would likely be downgraded in the absence of fundamental structural reforms supporting higher and sustainable medium term growth".

It also hinted that a rating upgrade was unlikely.

Standard & Poor's is expected to make its key announcement on South Africa's investment grading on December 2.

Like Fitch, S&P currently has South Africa rated at the lowest investment grade.

A junk rating by S&P could trigger a bond sell-off by foreign investors, as well as hiking Pretoria's borrowing costs.

source: news.abs-cbn.com

US probes Moody's rating agency - report

NEW YORK - US authorities are investigating the credit rating agency Moody's over its glowing assessments of mortgage deals in the runup to the 2008 financial crisis, The Wall Street Journal reported Sunday.

Citing people familiar with the situation, the newspaper said Justice Department officials had met with several former Moody's executives. It wasn't yet clear if the probe would result in a lawsuit.

If the investigation is confirmed, Moody's would become the second major US credit-rating firm in the Justice Department's crosshairs, after a case against Standard & Poor's.

S&P is expected to within days agree to pay $1.37 billion to settle lawsuits over its rosy grading of mortgage bonds in the financial crisis, sources told AFP.

Neither Moody's nor the Justice Department were immediately reachable for comment Sunday.

US authorities are probing whether the firm compromised its standards to score deals, the Journal reported, and the focus is on residential mortgage deals from about 2004 to 2007.

Positive ratings on what turned out to be extremely risky mortgage deals, known as subprime loans, were a main cause of the 2008 financial collapse.

Investors rely on rating firms' grades to assess risk.

Numerous banks have already paid huge fines and settlements for their roles in packaging and selling the bonds as low-risk, solid investments.

source: www.abs-cbnnews.com

Fitch: PH economy supports credit ratings

MANILA, Philippines - Debt watcher Fitch Ratings says the Philippines' sustained economic growth will support its credit ratings.

Fitch says the Philippines' ratings are anchored by a resilient economy, supported by a steady inflow of OFW remittances and a credible monetary policy framework.

But Fitch says low income and poor governance are the country's weaknesses.

Fitch lifted the Philippines' rating to investment grade status in March 2013 and maintained it early this year.

An investment grade rating makes it cheaper for the Philippines to borrow money abroad. - ANC

source: www.abs-cbnnews.com

Five Easy Steps to a Better Credit Score

Improving credit score is not really a rocket science.  Check out these five easy steps on how you can get a better credit score:

Apply for a credit card if you don’t have one.  Using a credit card regularly and paying off your monthly charges on time is a great way to boost your credit score.  This does not mean you should spend a fortune on credit card shopping.  You can use your credit card to pay for a small purchase so repayment can be easy.

Choose a credit card with a low rate and with features that matches your lifestyle.  Read and understand the fine print before submitting your application.  Make sure that your payments are reported to the available credit to maintain a high score.  If you own a credit card or credit cards, check your balance first and plan your spending ahead to avoid maxing out your limit.


Manage different types of accounts.  It’s not enough to have a credit card or multiple credit cards in your name.  You can further improve your credit rating by acquiring different types of debt such as a personal loan, a student loan, a car loan, or if you possible, a mortgage loan.

Lenders who check credit history are interested in how capable you are of manage debt and credit.  If you have a credit card, and at least two different loans in your name, this will surely strengthen your credit standing.  Of course, it’s important for you to submit your monthly loan payments on time to protect your personal credit.

Check your credit report regularly.  Consumers are entitled to one free report from each bureau every 12 months or annually. You can visit www.annualcreditreport.com to order your free report for this year.  You may choose to request all your three reports from the three bureaus at once or you can order one report from one bureau throughout the year.  If you want to directly order from a credit bureau, there is a fee of $9 to $12 per report.

Checking your credit report will give you the chance to examine it for possible errors. In case you find an incorrect detail, you can send a dispute letter to the bureau that issued your report.  You must also ensure that all your account activities are accurately recorded.

source: creditcreators.com

Most Common Credit Myths

Most Common Credit Myths
When you want to have a good credit score a little knowledge can be very powerful. Remember that a good credit score can open doors to many great credit offers. When you apply for a loan for a home or car or even a personal loan banks and other financial institutions use your credit report to determine if you qualify according to their guidelines.

Here are a few of the more common myths about credit:

People who lived in your residence can greatly affect your credit history.

It doesn’t make any difference at all who lived in your residence before you did as long as they did not share your credit history. The main thing any bank or financial institution is interested in is if you are able to repay your loan. They prefer you have a good history of addresses and the longer you live at any one place the better your chances. Lenders don’t like to see potential customers moving from place to place in under a year or so.

Credit agencies are responsible for your credit references.

Credit agencies are not responsible for your credit references. That is the responsibility of banks and financial institutions. They use the information obtained from your credit report to make determinations along with other data to calculate how much you will pay every month.

Previous debts are not considered when applying for a loan.

Yes they do count when applying for a loan as do court judgments for not paying debts and bankruptcies. These items remain on your credit report for at least seven years. Some items will stay on your credit report for longer than that. Even if you miss a payment it stays on your credit report for at least four years. Banks and financial institutions take these into consideration and think you may not repay them or default on payments.

You may be on a credit blacklist.

There is no such thing as a blacklist because of your origin, race, sex or ethnic origin. It is against the law for any lender to consider any of these when applying for a loan. Some of the factors they do consider are how much you currently owe and if you make your payments on time. They want to be absolutely sure you are not overextending yourself by taking on more than you can pay back.

Who you have living in your home such as family or friends can effect your credit rating

It doesn’t matter who is living with you since they do not have anything to do with your credit rating. The only exception is someone that shares a joint account with you say a joint mortgage. If you do have someone living with you that you have a credit connection with lenders will also look at their credit report as well. The reason for this is if they have late payments it could effect you getting approved for a loan.

These are just some of a few myths people believe regarding their credit score. The fact is that in order to dispel these and other misunderstandings one needs to educate themselves on learning how your credit score actually works and all factors that influence it, to what level and what factors do not influence it. Because caring about your credit score can and will make a difference whenever you seek out credit. A better credit score means your creditors will most always provide a better rate of interest when it comes to repaying your loan. This can amount to thousands of dollars with is nothing to overlook.

source: 20smoney.com

Moody's drops France's credit rating

Credit rating firm Moody's Investors Service lowered France's AAA rating a notch Monday, citing the country's high exposure to investments in Spain and Greece.

Moody's said the outlook for France to steer clear of trouble was diminishing, given the high level of investments in troubled eurozone countries, The Daily Telegraph reported Monday.

Moody's, which dropped France from the top rating of AAA to Aa1, also cited France's poor track record in making changes.

Moody's, which gave France's rating a negative outlook nine months ago, is now the second major credit rating agency, along with Standard & Poor's, to downgrade its credit rating.

Fitch Ratings, which is a French company, has so far left France at AAA.

Moody's said France was being hurt by rigid labor laws and outmoded corporate regulations.

While President Francois Hollande's administration was attempting to make positive changes, "The track record of successive French governments in effecting such measures over the past two decades has been poor," Moody's said.

"Moody's is now giving France the same rating as Standard & Poor's, which has allowed us to live with low interest rates for many months," said French Finance Minister Pierre Moscovici, referring to borrowing costs for the French government, which have not been adversely affected by the change in its credit status.

However, "further shocks to sovereign and bank credit markets would further undermine financial and economic stability in France as well as in other euro area countries," Moody's said in a statement.

source: upi.com

How Much Car Can You Afford?

If you are interested in buying a car and you are set on leasing, it is very important that you maintain a good balance between the type of ride you desire and your ability to finance it. Remember that even though you may qualify for a car loan, burdening yourself with one that is beyond your payment ability can easily destabilize your financial status. To rightly determine what you can afford, it is important to create a budget. Here are some things to keep in mind when creating said budget. (See also: Guide to Buying a Used Car Without Going Crazy)

The 20% Rule of Thumb

The general rule on car payments is that they should not exceed 20% of your take-home or net monthly income. This value is inclusive of car insurance, repairs, and monthly payments. The value should also include every vehicle you own. Even if you do not take care of other major monthly expenses such as rent, you should still stick to the rule. Obviously, if you will be making a full cash payment for your new car, you will not need to apply the 20% rule. But the rest of you, take note.

Your Interest Rate Matters

Your credit rating will help determine the interest rate you will be required to pay. If you have a poor credit rating, you will most likely end up paying a higher interest rate than someone with a good credit rating. It is important that you factor your loan's interest rate into your budget, so that you can choose a car that truly matches with what you can afford. Different times of the year also have different market interest rates. If rates are lower, your monthly payment will be reduced, and you might be able to afford a car with a higher value than you initially thought (as long as it is still within your budget). This is also one reason why so many people talk about trying to achieve a perfect credit score.

You Should Make a Down Payment

Not so long ago, customers were required to make a down payment before getting a car. Today, however, many car dealers are willing to offer cars even with no down payment. In spite of this change, it will work out best for you if you make a substantial down payment, since you will be able to afford a car with a better value and still stick to the 20% limit.

Once you have determined how much car you can comfortably afford, it is important that you stick to your budget when you step into the show room. This is because you will most likely find persuasive salespeople, most of whom work on commission and are therefore only interested in getting the highest pay. Most of these salesmen are least concerned about whether or not you can afford a particular car. It is therefore important that you remain adamant in the midst of all the persuasion to avoid spending money that you do not have.

source: wisebread.com

S&P raises Philippine credit rating to a notch below investment-grade

After weeks of talking up the country's stellar first-quarter economic performance, the Aquino government got what it wished for: a credit rating upgrade from one of three major international debt watchers.

In a statement, Standard & Poor's Ratings Services on Wednesday said it lifted the Philippines' long-term foreign currency rating to 'BB+' from 'BB.' The agency also affirmed its 'BB+' long-term local currency rating on the Philippines. Both ratings were assigned a stable outlook.

S&P's action lifts the country's credit score to a notch below investment-grade, putting it at par with the score affirmed last week by another major agency, Fitch Ratings.

This leaves Moody's Investors Service as the only other key rater that has yet to raise its score on the Philippines to the same level.

A higher rating allows the Philippines to borrow abroad at a cheaper rate, thus enabling the government to set aside more money for addressing infrastructure bottlenecks and helping the poor.

"The foreign currency rating upgrade reflects our assessment of gradually easing fiscal vulnerability, as the government's fiscal consolidation improves its debt profile and lowers its interest burden," said Agost Benard, S&P credit analyst.

"A high, albeit declining, interest burden constitutes an additional rating constraint. The interest burden of 13 percent of general government revenues is high, largely because revenues remain low relative to the size of the economy," Benard said, citing the need to widen the tax base and improve compliance.

"Notably, the government's foreign-currency debt stands at a relatively high 42 percent of total, rendering debt service costs and fiscal outturns susceptible to adverse exchange rate movements," he added.

Data the Bureau of Treasury released on Wednesday showed that debt servicing last May rose nearly eight percent from a year ago, but the year-to-date figure had fallen by 12.4 percent.

The Philippines' key debt ratios have been on a downtrend, hitting decade lows in 2011. In the first quarter of this year, the country's external debt ratio - foreign debt as a percentage of the country's gross domestic product - eased to 27.4 percent from a year ago's 29.5 percent. This ratio is a measure of solvency, and so indicates the Philippines' capacity to pay down debt in the long run.

The country's external debt service ratio likewise fell to eight percent this year from 8.2 percent in 2011, and is way below the 20 to 25 percent international benchmark. This ratio measures the sufficiency of foreign exchange to meet maturing debt.

The Philippines has enjoyed ample foreign exchange inflows so far this year, causing the peso to hit a four-year high on Tuesday. Part of that liquidity helped fuel a stock market rally that saw the Philippine Stock Exchange index hitting a new record close of 5,365.7 also on Tuesday.

Despite the global uncertainty caused by the euro zone debt crisis and the slowdown in the US and China, the Bangko Sentral ng Pilipinas still expects the country to register a $2.7 billion balance of payment surplus this year.

Current account surplus forecast at 2% of GDP

"The rating action also reflects the country's strengthening external position, with remittances and an expanding service export sector continuing to drive current account surpluses," Benard said.

"We project ongoing current account surpluses of about two percent of GDP, based on remittance inflows from a large and well-diversified expatriate labor force, and a fast-expanding business process outsourcing industry," he added.

Communications Secretary Ramon Carandang said the upgrade to BB+ "is an affirmation of the fiscal management of the Aquino administration."

"At a time when countries around the world are debating austerity versus stimulus, we have had the fiscal space to provide stimulus without weakening our fiscal position. The President and the economic team have worked hard to win ratings upgrades and we're now another step closer to investment grade status," he said.

Separately, Finance Secretary Cesar V. Purisima said the Philippines "can now clearly make our case for an investment grade status."

"This is the eight positive credit ratings action under the Aquino administration and this only gives us more confidence to continue with the work that we have started towards macroeconomic stability, fiscal sustainability and inclusive economic growth," he added.

On Tuesday, the Cabinet economic cluster, meeting with President Benigno Aquino III, forecast GDP growth in the second quarter exceeding the better-than-expected 6.4 percent in the first quarter. The Philippines' first-quarter growth was Asia's second fastest after China.

Budget Secretary Florencio Abad said he already cleared for disbursement 91 percent of the infrastructure outlay falling under the Department of Public Works and Highways, laying the ground for more government spending in the coming months.

source: interaksyon.com

Moody's downgrades Nokia credit rating to junk status

PARIS - Ratings agency Moody's downgraded Friday its long-term credit rating of Finnish telecommunications group Nokia by one notch to the speculative level of "Ba1" and said its outlook remained negative.

"Today's rating action reflects our view that Nokia's far-reaching restructuring plan ... delineates a scale of earnings pressure and cash consumption that is larger than we had previously assumed," a Moody's statement said, quoting senior vice president Wolfgang Draack.

The agency nonetheless considered Nokia's decision to take on a drastic restructuring of its operations "as positive and necessary to return the group to profitability.

"A return to profitability also depends on Nokia successfully transitioning its range of smartphones to the new Windows operating system and stabilising its feature phone business," the statement said.

Nokia, one of the world's biggest mobile phone makers, shocked markets on Thursday when it unveiled 10,000 more job cuts as part of deep additional cost-cutting measures.

"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," Nokia chief executive Stephen Elop said in a statement.

Following the news, Nokia, which only recently lost the world number one ranking it had held for 14 years, saw its share price plunge more than 16 percent on the Helsinki stock exchange.

The company, which has been undergoing a major restructuring for more than a year, said it would implement an additional 1.6 billion euros ($2.0 billion) in cost reductions by the end of next year, especially affecting its beleaguered Devices & Services unit.

Moody's underscored positive elements at the Finnish group meanwhile, noting "that Nokia has maintained a strong liquidity position and capital structure.

In addition, "for its liquidity needs, Nokia also has a reliable 1.5 billion euro revolving credit facility due in 2016," the ratings agency said.

source: interaksyon.com

Moody's, S&P may lift Philippine credit rating -- Nomura

MANILA, Philippines -- Nomura Securities said Moody's Investors Service and Standard and Poor's (S&P) may raise the Philippines' credit rating, a move that would bring the country one notch below the coveted investment-grade status.

“We expect Moody’s and S&P to play catch-up with Fitch, likely raising their ratings from Ba2/BB to Ba1/BB+ within the next 12 months. However, an investment grade rating is not imminent, despite improvements in the sovereign credit profile,” the Japanese securities firm said in its latest country report.

Fitch Ratings Inc and Moody's raised their credit scores for the Philippines in June last year. Fitch lifted its score from BB to BB+, or a notch below investment grade. Moody's increased its rating from Ba3 to Ba2, or two notches below investment-grade.

S&P last December followed with an upgrade in its outlook from stable to positive, indicating it would raise the Philippines' credit score within a year.

Finance Secretary Cesar V. Purisima met with representatives of Moody's and Fitch while on a road show in London this week.

He said the two credit rating firms recognized the Philippines' better debt and revenue ratios, which resulted from the government's efforts to improve tax administration.

“I met with them to continue our dialogue on the strength and resiliency of the Philippine economy, as well as to discuss our view that the Philippines continues to be underrated,” Purisima said in a statement.

“The market has already recognized the Philippines’ resilience and the strength of our credit standing and is rating us as investment grade. In fact, our bond issuance in January marked the lowest US dollar coupon ever achieved by an Asian sovereign for a bond with a tenor greater than 10 years,” he said.

“The ratings agencies are very keen on our push for reforms on sin taxes. A World Bank study estimates that we could gain as much as 1.3 percent of GDP in additional revenues from reforms in the sin taxes such as uniform tax rates and indexation,” Purisima said. GDP refers to gross domestic product, which is the total amount of final goods and services produced in the country.

An investment grade rating would cut the Philippines' borrowing costs whenever it raises money in the financial markets. Furthermore, emerging from the current junk status would enable the country to draw investors who shun below-investment grade destinations.

More foreign investments would mean boosting the country's balance of payments surplus and swelling its gross international reserves. Ample reerves prop up the peso and helps keep domestic inflation at bay.

source: interaksyon.com