There is every reason why we should be celebrating Fitch’s recent credit upgrade of the Philippines. With the upgrade, we are now officially “investment-grade” which really means many things. An investment-grade status is a confirmation that the Philippines is a sound nation financially and that it has the capacity to pay off its debts.

President Aquino is obviously ecstatic with the upgrade; he said “this is an institutional affirmation of our sound good governance agenda” in a statement.

In a nutshell, the new status will effectively reduce the cost of our borrowings which when managed properly, can be used for key investments and infrastructure that will further spur economic growth. The upgrade will also usher the inflow of more institutional investments such as investment funds of other countries that usually require investment destinations to be ‘investment grade’. This move will even grow the local investment market which has been bullish in the last 3 years. The Philippine Stock Market already reflected a positive sentiment upon the news of the upgrade. It is more likely that the stock market will continue to ride on this upgrade, as well as other investment instruments like bonds.

It is important to note that while Fitch is a very reputable rating organization, the other two rating organizations namely Standard & Poor’s and Moody’s must also upgrade the status of Philippines to confirm our being truly ‘investment-grade’.

I believe that the upgrades merely affirmed what the market has already known as showed by how the Philippine investments have been faring, particularly our sovereign debt. For some time now, the Philippine sovereign issues (ROPs) have been trading with yields much lower than other nations with the same credit rating; in fact, the Yield-to-Maturity (YTM) of our ROPs are even lower than the debts of other nations who are rated as ‘investment-grade.’ Returns are always an indication of the risks involved so when the market makes our debts trade with lower yields, it also means that the market views us as low risk as well.

I asked some of my friends about what the benefits of the upgrade means to them and to the nation as a whole. I’m also proud to say that these friends of mine are experts in their own fields as well – I am blessed with awesome friends right? This is what they say:

“We deserve the upgrade, but remember that a credit rating is just a confirmation of what is already present in a debt issue, the debt security issuer and the economy as a whole. In other words, we and not the rating agency made ourselves investment grade. So upgrade or not, the country is indeed on its way to becoming an economic force in the world arena. We just need to learn how to spread wealth better.”

— Efren Ll. Cruz, RFP- President of Personal Finance Advisers Corp., best-selling finance author, columnist, investments expert

“This is definitely the seal and proof that Philippines is a good country to invest in and supports my bullishness in the Philippines. This will open up our markets to more investors who were not allowed to participate before. Increased Investments will surely open up better opportunities for the ordinary Filipino. I definitely recommend that Filipinos participate in this growth opportunity by investing as well.”

— Marvin Fausto – Chief Investment Officer of Banco de Oro Universal Bank

“The investment upgrade will propel our stock market even further as it will allow more foreign funds to invest in the Philippines. It will also help our economy as it will allow our government to borrow cheap, build more infrastructures, and allow businessmen to expand their businesses further. To the common Filipino, it would give them an opportunity to take housing and car loans cheaper. This upgrade has triggered a signal to the world that – ‘Hey! The Philippines exists and is now a safe haven for your money!’ This is such a great time to be a Filipino.

— Marvin Germo, RFP – Stock Market expert and investments speaker

“Investment Grade is not an end objective. It is a recognition that a country has graduated from a condition of doubt to a reasonable level of investment risk. The Philippines graduating to that is an expectation this year – the only thing uncertain was when. Fitch’s ratings upgrade to the Philippines is a validation of the core improvement in the country’s international credit and investment status. This upgrade means that the Philippines has to do its homework. It has leveled up in the eyes of the investment community globally. The upgrade actually does not necessarily translate to immediate economic betterment as being investment grade simply means that one can borrow at cheaper rates in the international market. Borrowing is something we do not need to do now as the country is very liquid – both the government and the private sector. Local interest rates are in their historic lows already. What the investment grade is telling us is that ‘we believe in your country to be able to institute the needed structural reforms to translate our trust into productive pursuits.’ Finally, it is important that the two other larger ratings agencies – S&P and Moody’s should affirm the same soon to consolidate and cement this trust.”

— Dr. Alvin P. Ang – Economist and President of the Philippine Economic Society

“Companies that would not otherwise invest in the Philippines as they require investment grade status would now do so. Our borrowing costs would also go down. This means more jobs and a stronger economy as money goes towards industries, infrastructure, etc. In the near term the peso is likely to appreciate though, which could pose problems for OFW families.”

— Rizalina Mantaring – President & CEO, Sun Life Philippines

The above views are from the experts; I will post another blog about the views of ordinary Filipinos (who are experts in their own rights) which I solicited through social media.

We are very excited with the nation as a whole and while there is much work to be done, I believe we are in the right path. We must also never forget where all these blessings are coming from and knowing our responsibilities for such blessings, lest all these gains will be for nothing.

Blessed is the nation whose God is the LORD, the people he chose for his inheritance. – Psalm 33:12, NIV

It is my pleasure and honor to present the 2013 Outlook of one of the women who moves and shapes the business environment, Ms. Riza Mantaring, CEO of Sun Life Philippines. Riza has successfully lead her company to be the number 1 life insurance company in the Philippines (in total premiums) as of 2011. What I admire most about Ms. Mantaring is not only her dedication to excellence in work and in life but also her zeal in promoting financial education for the Filipinos.

The 2013 Outlook of Riza Mantaring

We expect 2013 to be another strong year for the economy and the industry. While there is some risk from external factors such as the lingering European debt crisis, the continuing US fiscal issues, and a slowdown in China, we feel the Philippines will be relatively insulated as the economy is being driven by strong domestic consumption. Inflation is under control, OFW remittances continue to increase, and the expected increase in government spending, particularly for infrastructure, plus election spending will also help support growth.  And we have a long runway ahead as we have a young population with growing purchasing power – we are in the so-called “demographic sweet spot!”

For the insurance sector, with the very low market penetration and increasing affluence, we expect the strong growth of the past three years to continue. The low interest rates, however, will continue to pose a problem as they make traditional protection products difficult to price attractively. Investment-linked products have become the bread and butter of the industry, but it is important to be able to maintain traditional products as if the market turns for the worse, this could severely impact the industry as we saw in 2008-2009.

For asset management, we expect growth to accelerate given the favorable market conditions, the strong liquidity in the system, and investors searching for better returns on their investments.

RizaMantaring is the President & CEO of the Sun Life Financial group of companies in the Philippines, and a member of its various boards.She started out in Information Technology and took on various roles through her 20+ years at Sun Life before becoming CEO.

Riza is a member of the Sun Life Asia Leadership Team.  She has also participated in various international special projects and teams such as the task force for worldwide restructuring of the company, the task force for business processes, and special teams for Mergers & Acquisitions.

In 2010, on the occasion of the 100^th anniversary of the University of the Philippines College of Engineering, she was selected one of the 100 Most Outstanding Alumni of the past century. In 2011, she was named by Moneysense Magazine one of the 12 Most Influential in Personal Finance, and became a recipient of the 2011 CEO EXCEL award given by the International Association of Business Communicators.  Riza was recognized for bold and innovative programs and harnessing the power of communication to implement these programs, including the multi-awarded and pioneering “It’s Time!” financial literacy advocacy.

Riza graduated with a B.S. Electrical Engineering degree (cum laude) from the University of the Philippines, and an M.S. Computer Science from the State University of New York at Albany.  She has also attended numerous executive development programs conducted by Harvard University, The Wharton School, Duke University, Oxford University, Asian Institute of Management, and The Niagara Institute.  She is a Fellow of the Life Management Institute (with distinction).

She has been a board director of the Philippine Life Insurance Association since 2011 and is currently its Treasurer, and served as a board director of the Philippine Federation of Pre-need Companies from 2006-2008.

It is an honor to feature the 2012 outlook of a captain of her industry. I had the privilege to work with her about a decade and a half ago and it is a treat to see her in a meteoric rise to CEO, Ms. Riza Mantaring of Sun Life Financial.

Here’s the 2012 Outlook of Ms. Riza Mantaring

There is a lot of uncertainty attached to 2012.  While prospects appear to
have improved over the past few months from the earlier fears of a double
dip recession in the US or worsening of the European debt crisis, a number
of factors can affect global economic growth — a still bumpy and difficult
resolution to the Euro debt crisis, the struggle to cap large deficits in
other developed countries, political tensions in the Middle East and North
Africa, slower growth and higher inflation in emerging markets, and
political uncertainty as several countries undergo elections.

While 2012 is difficult to predict, we feel the Philippines is in a strong
position to weather the challenging economic and market climate this year.
Interest rates are projected to remain low, which should encourage
investments, while the robust flow of OFW remittances should continue to
support strong private sector consumption.  Increased government spending
is expected to boost economic growth.  Even under the best of circumstances
though, we expect volatility given the challenges in the global front, and
we do not expect equity markets to post outsized returns.  Still, fund
managers who adopt the right trading strategies through the market ups and
downs can produce good returns.  For fixed-income, the outlook for rates
remaining low underpins the outlook for decent returns.

Who is Riza Mantaring?

Ms. Mantaring is currently the President and CEO of one of the country’s preeminent financial services company, Sun Life Financial. Sun Life is a leading provider of life insurance and mutual funds. Riza has been in the financial services industry for over two decades and has been involved in information technology, customer services and operations. She was later named as the COO of Sun Life prior to her appointment of CEO. Under her management, Sun Life continues to improve its market share in the country and introduced many trail blazing enhancements. Sun Life has recently launched a pioneering financial literacy advocacy called “It’s Time” utilizing multiple media which resulted to their winning of many awards, even an international award.