Moody’s: Strong dollar to test some Philippines corporates

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June 9, 2026 | 12:00am

MANILA, Philippines — The peso’s steep fall against the dollar is raising pressure on companies with foreign currency debt and dollar-linked costs, although Moody’s Ratings said most rated corporates in South and Southeast Asia still have enough buffers to withstand further currency weakness.

In a sector report, Moody’s said the peso depreciated by 10.5 percent against the dollar over the past year as of June 4, among the sharpest declines in the region alongside the Indian rupee’s 11.5-percent drop and the Indonesian rupiah’s 10.7-percent fall.

The rating agency said currency depreciation across South and Southeast Asia intensified through 2025 and 2026, driven by the escalating conflict in the Middle East and the related oil price shock, US tariffs and foreign capital outflows.

Moody’s said “record dollar strength will test corporates,” although “overall credit strength across South and Southeast Asia will remain stable” over the next 12 to 18 months.

Of the 41 rated companies in India, Indonesia and the Philippines, Moody’s said only seven, or 17 percent, are exposed to the effects of the stronger dollar.

The remaining 34 companies, or 83 percent, either do not have material foreign exchange exposure or have enough financial buffers to absorb further weakness in their local currencies.

For the Philippines, Moody’s cited varying degrees of exposure among PLDT Inc., First Pacific Co. Ltd. and Philippine Airlines Inc. (PAL) as the weaker peso raises the cost of servicing dollar obligations and paying for dollar-denominated expenses.

PLDT, which has a Baa2 stable rating, has 14 percent of its debt denominated in dollars. However, Moody’s said the telco actively hedges its currency exposure, reducing the unhedged portion to around five percent of total debt.

The rating agency also flagged the exposure of First Pacific, a Hong Kong-based conglomerate with major investments in the Philippines and Indonesia. First Pacific relies on dividends from key operating companies such as Indofood, PLDT and Metro Pacific Investments Corp., which operate in markets that have seen their currencies weaken against the dollar.

At the holding company level, First Pacific has $1.5 billion in debt, or $1.3 billion in net debt, all denominated in dollars.

Moody’s said First Pacific receives meaningful dividends from Singapore-based power generator PacificLight Power, but a substantial portion of these dividends is expected to be reinvested as equity contributions to fund the company’s expansion over the next two years.

For PAL, Moody’s said most of the flag carrier’s $1.8-billion debt is denominated in dollars, including $1.4 billion in aircraft lease liabilities and asset-backed securities. Jet fuel, which accounts for around 31 percent of operating expenses, is also priced in dollars.

PAL does not hedge fuel costs, leaving the airline exposed to volatility in oil prices and exchange rates.

However, Moody’s said these risks are partly offset by the airline’s foreign currency revenue profile. Around 35 percent of PAL’s revenue is directly earned in dollars, providing a partial natural hedge against dollar-denominated debt service and operating costs.

This is complemented by bank settlement arrangements in several countries, which lift its effective dollar-linked revenue to around 45 percent. PAL also regularly converts peso revenue, equivalent to about 30 percent of total revenue, into dollars.

As of March 31, more than 75 percent of PAL’s $591-million cash holdings were in dollars, while its dollar reporting currency eliminates mark-to-market foreign exchange volatility on its lease liabilities.