Jul. 4--STANDARD and Poor's (S&P) on Friday said it is keeping its current credit score of below-investment grade or junk on the Philippines, adding that this rating would likely persist in the next six months to a year.

A below-investment grade or junk rating means that a borrower -- in this case, the Philippine government -- would have to bear higher interest rates whenever it taps the bond market for its financing needs.

In a statement, S&P said it affirmed the Philippines' 'BB-' long-term and 'B' short-term foreign-currency sovereign credit rating.

The rating company also affirmed the 'BB+' long-term and 'B' short-term local-currency credit score on the country.

S&P bestowed a stable outlook on these ratings.

The rating firm rates borrowers on a scale from AAA to D. Intermediate ratings are offered at each level between AA and CCC (for example, BBB+, BBB and BBB-). An intermediate rating that hovers on BB indicates a borrower is more prone to changes in the economy.

The outlook "balance[s] the external strength and relatively low vulnerability of the banking sector against the Philippines' long-standing fiscal weaknesses, which have been accentuated by the effects of the global economic downturn," S&P said.

"Resilient remittance inflows, which rose 2.6 percent in the first four months of 2009, combined with growing surpluses in service exports and prudent exchange-rate management, ensure a safe level of external reserves. And they have managed to do so in the face of drastic recent contractions in foreign direct investment and portfolio inflows," Takahira Ogawa, S&P credit analyst, said.

The credit-ratings firm noted that the country was exposed to only moderate short-term risk compared with its peers in the same rating category.

"We project [the Philippiens'] gross external financing requirements at 78 percent of usable reserves plus current account receipts. We also expect its usable reserves to cover short-term debt with residual maturity 3.2 times," Ogawa said.

The ratings drew support from country's resilient external accounts, whereby an improving liquidity position continues to lower external liquidity risk even against the backdrop of an extremely challenging external environment.

S&P said the rating is also supported by the low level, and low likelihood of realization of, contingent liabilities posed by the domestic banking system, given the absence of features that caused collapses and necessitated government bailouts in numerous other countries.