MANILA, Philippines — Moody’s Investor Service upgraded the Philippines’ sovereign credit rating by one notch on Thursday, recognizing the government’s falling debt levels and the strength of the domestic economy.

On Thursday, Moody’s became the second credit rating agency to have the Philippines at two notches above “junk” status. The Philippines’ long-term sovereign debt rating now stands at “Baa2.”

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“Coupled with relatively robust economic growth, the Philippines’ fiscal performance has led to the convergence of general government debt as a share of GDP to the corresponding peer medians,” Moody’s said in a statement.

“While we expect other measures related to the country’s public indebtedness and debt affordability to improve over the next two years, the corresponding peer medians continue to erode,” it added.

This comes more than a year after Moody’s gave the Philippines a “positive” outlook, which is usually a prelude of a credit rating upgrade. Earlier this year, Standard & Poor’s gave the Philippines a similar grade of two notches above junk status.

Fitch Ratings, the third of the three major rating agencies, still has the Philippines at its minimum “investment grade.”

Sovereign credit ratings, which are indications on the government’s ability to repay obligations, are used by investors as proxies for the strength and stability of the local economy.

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