Development Bank of the Philippines (DBP) is working closely with the Department of Finance (DoF), state regulators and multi-lateral lending institutions in establishing a Local Government Unit (LGU) credit rating system that seeks to mainstream bond flotations as a sustainable financing option for local development projects, a top official said. DBP President and Chief Executive Officer Emmanuel Herbosa said the proposed rating system would provide the bond market with credible risk indicators of individual LGU bonds as well as information on outstanding bond issues which would help buoy confidence and improve risk-appetite of potential investors. “DBP hopes to institute an LGU-rating organization, much like the credit rating agencies which rate the viability of investments relative to the likelihood of default,” Herbosa said. Herbosa said that DBP’s extensive experience with the LGU sector would help advance the LGU bond market as an essential financial resource to bankroll essential critical infrastructure and social development projects which are commonly heavily dependent on appropriations from the National Government through the Internal Revenue Allotment. He said through the credit-rating system, LGUs would be able to diversify funds sources which would be based on needs, revenue-earning capacity, and financial maturity.

Source: Manila Times May 19, 2021 16:52 UTC