MANILA – Credit rating agency Standard & Poor's Ratings Services has affirmed the state-run Development Bank of the Philippines' 'BB+' long-term and 'B' short-term issuer credit ratings with “stable” outlook.

The debt watcher also affirmed the bank's 'axBBB+' long-term and 'axA-2' short-term ASEAN regional scale ratings.

"We have equalized the ratings on DBP with the sovereign credit ratings on the Philippines because of the bank's critical public policy role and integral link with the government," S&P credit analyst Agost Benard said in a statement.

“We see an "almost certain" likelihood that the government of the Republic of the Philippines (BB+/Stable/B; axBBB+/axA-2) will provide timely and sufficient extraordinary support to DBP in the event of financial distress,” he said.

S&P's decision in affirming the bank's ratings was based on DBP's on two primary reason namely its “critical” role as a legally mandated policy bank supporting the social and economic development agenda of national and local governments in the Philippines; and it being an "integral" link as a financial agency of the Philippine government.

The ratings agency gives DBP a stand-alone credit profile rating of 'bb-', which “reflects the bank's satisfactory financial profile and strategy and competent management.”

It explained that the profile “is constrained by the bank's narrow sector focus, limited diversification, and exposure to non-commercial projects.”

Bernard said S&P's “overall assessment (on DBP) reflects the history of capital support and sovereign guarantees by the national government for DBP's external borrowing."

"However, the bank's business profile is constrained by its narrow focus on corporate and small and midsize enterprise lending, by virtue of its policy role,” he pointed out.

Bernard cited that “in our opinion, DBP has a stable earnings profile” and assesses the bank's capitalization “as moderate relative to the scale and risk profile of its operations.”

S&P expects DBP “to remain an important instrument of the government's medium-term development strategy” and believes that “the bank's public policy role will not change during this time.”*PNA

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