Moody's upgrades Globe's credit rating (BusinessWorld)

Published in the July 15, 2005 issue of BusinessWorld

Corporate World

BY JENNEE GRACE U. RUBRICO, Senior Reporter

Moody’s upgrades Globe’s credit rating

Credit ratings firm Moody’s Investors Services yesterday said it upgraded the credit ratings of publicly listed telecommunications firm Globe Telecom, Inc. after considering the support that the firm could expect from one of its biggest shareholders, state-owned Singapore Telecom (Singtel).
Moody’s said that it upgraded Globe’s senior unsecured foreign currency debt rating to Ba3/POS from Ba2/NEG and affirmed the company’s long-term domestic currency corporate family rating at Baa3/POS.
This was after the ratings firm evaluated Globe under the new joint-default analysis (JDA) rating methodology, which classified the Ayala-owned company as a government-related issuer by virtue of having Singtel as its shareholder.
Singtel has a 44% stake in Globe.
"The JDA rating methodology considers Singapore Telecom’s ownership in Globe and Moody’s assessment that it will act in such a way to enable the Company to avoid a default on its debt obligations," Globe said in a disclosure to the Philippine Stock Exchange.
FOREIGN SUPPORT
Globe got the upgrade as Sing-tel’s stake in the company implied that the former could get support from the state-owned and highly rated Singaporean telecommunications company and, thus, was less likely to default on its obligations.
Having Singtel as a major shareholder effectively made the securities issued by Globe safer investments.
The impact of the credit upgrade on Globe is not likely to be immediate as the company as yet has no plans of tapping the debt market.
Existing holders of Globe securities, however, will benefit from the credit upgrade as the move makes the bonds more attractive.
Moody’s yesterday published the results of its examination of the ratings of corporate government-related entities in Asia Pacific, including Japan, in light of the new rating methodology for joint default analysis.
It said that the new methodology formally disaggregates the ratings of government related institutions (GRI) into four components: an assessment of their baseline credit risk, the default risk of the supporting government, the default dependence between the GRI and the government and the expected level of support from the government.