Moody’s bullish on the Philippines; casino business’ 2013 growth should be met with cautious expectations

Philippines FlagThe Philippines has received a tremendous vote of confidence from another one of the major international credit rating agencies who said that the country’s banks are immune to global economic shocks, according to the Manila Standard Today. Following Standard & Poor’s Ratings Services similar proclamation back in November, Moody’s Investors Service said that the Philippines’ banking system would be able to withstand negative global events and continue to be resilient, even in the face of slumping economies all over the world.

In its examination, Moody’s proclamation of the Philippines’ positive outlook stemmed from its banking system, which “will remain relatively immune to global shocks and continue to benefit fro steady credit growth”. The credit rating agency also remarked that the broad credit outlook for banks in the Asia-Pacific region would remain stable on expectations that they’d be insulated from the negative credit ratings a lot of Western countries are experiencing.

Of the trends of the 14 banking systems in the region that Moody’s examined, the Philippines was the only one that came out with a positive outlook while 11 other countries came out with stable outlooks. On the opposite end of the barrel, however, were India and Vietnam, both of whom were given negative outlooks.

Moody’s Financial Institutions Group in Asia Pacific managing director Stephen Long pointed out that consideration for the rating was driven by a number of factors, including the region’s economic resilience, its relatively accommodative monetary policy, the banks’ strong liquidity relative to global norms, and their robust capital buffers.

“For the region, in terms of specifics, we consider that the economic recovery from the troughs reached in mid-2012 will continue in much of the region in 2013,” Long added. “At the same time, interest rates will remain low, making an asset quality shock unlikely during this year in most Asian countries.”

It could be argued that part of the Philippines’ continued economic growth is being driven by a growing tourism that would still see further growth with the burgeoning gambling industry in the country set to hit another level with the opening of a couple of integrated casino projects. Talking to Interaksyon, CB Richard Ellis Philippines Inc executive director Victor Asuncion said the market will be observing how Bloomberry Resort Corp and Belle Corp will handle the pressure of officially opening their respective casino projects and how the foreign market will respond to the increased gambling options available in the country.

“We want to see how foreign market of gamers will respond,” Asuncion told Interaksyon. “This is the first conscious international effort of the Philippines to be known as a gaming destination,” Asuncion said.

While it’s easy to paint the Philippines as the new Las Vegas, as some have openly proclaimed in the past, a level of caution still needs to be exercised to ensure that all the bloated prognostications and somewhat assumed hyperbole won’t blow up in the country’s face, something Asuncion alluded to when he said that there will be “birth pains” and that there are still a number of issues that need be dealt with before engaging in blush speak. “When we reach that certain stability then we can capture a share of the market,” the executive director of CB Richard Ellis Philippines said.