China's domestic rating agency Dagong on Friday downgraded the rating outlook of the Republic of the Philippines from stable to negative.

Ratings for the country's domestic currency and foreign currency sovereign credit were both maintained at BB-, the agency said in a statement on its website.

"Under the background of the forthcoming tightening of global monetary policy, the Philippines' economic growth mode characterized by substantial capital inflows and fast credit expansion is facing severe challenges," the statement said.

The economy of the Philippines will face more downward pressure as interest rates rise in both domestic and overseas markets, Dagong said, forecasting its growth rate at 4.5 percent in 2014 and 3 percent in 2015.

The country's growth in the first three quarters of 2013 stood at 7.4 percent. Data for the whole year is yet to be released.

The agency also attributed the outlook downgrade to threats from rising asset bubbles and a meager increase in foreign exchange reserves, which will be insufficient to withstand shocks from external tightening of liquidity.

Dagong will further monitor changes in the Philippines' economic, financial and fiscal conditions and make timely adjustments to its ratings, the statement said. Endi

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