Image caption The Philippine Stock Exchange has been amongst the best performers in the region this year

Ratings agency Standard & Poor's (S&P) has raised the Philippines' credit rating, taking it one step away from its aim to become an invetsment grade economy.

S&P raised it rating to BB+ from BB, the highest level since 2003.

The rating agency said the upgrade was a result of the government's improving finances.

The higher rating grade is likely to help the Philippines attract more investment, a key to further growth.

"The foreign currency rating upgrade reflects our assessment of gradually easing fiscal vulnerability, as the government's fiscal consolidation improves its debt profile and lowers its interest burden," said S&P.

"The rating action also reflects the country's strengthening external position, with remittances and an expanding service export sector continuing to drive current account surpluses."

Two of the three major international rating agencies now have the Philippines one rung below investment grade.