Fitch Ratings upgraded the ratings and raised the support rating floors of several Philippine banks following the upgrade of the Philippines' sovereign ratings.
The rating agency said Dec. 14 that it upgraded the long-term foreign and local currency issuer default ratings of two state-owned banks, Development Bank of the Philippines and Land Bank of the Philippines, to BBB- from BB+, with stable outlooks.
Both banks' short-term foreign currency issuer default ratings were also upgraded to F3 from B, while their support ratings were upgraded to 2 from 3, and their support rating floors were upgraded to BBB- from BB+.
At the same time, the rating agency raised the support rating floors of six privately owned banks.
The rating agency raised the support rating floors of Bank of the Philippine Islands, BDO Unibank Inc. and Metropolitan Bank & Trust Co. to BBB- from BB+, while their support ratings were upgraded to 2 from 3.
In addition, the support ratings floors of China Banking Corp., Philippine National Bank. and Rizal Commercial Banking Corp. were raised to BB from BB-. Their support ratings were affirmed at 3.
The upgrade of the ratings of Development Bank of the Philippines and Land Bank of the Philippines are driven by the raising of their support rating floors, which in turn, stem from Fitch's expectation of an improving sovereign fiscal profile. The ratings reflect expectations of a high likelihood of support for the two banks from the sovereign, if needed.
The upgrade of the support rating floors of the privately owned banks similarly reflect the improving sovereign capacity to provide extraordinary support, as well as Fitch's belief that the sovereign's likelihood to provide such support to the banks remains intact, the rating agency said.
