Shares of the iShares MSCI Philippines Investable Market Index Fund (EPHE) are up almost one percent in midday trading following a surprising third-quarter GDP report from the Asian nation. Growth in the Philippine economy soared 7.1 percent in the quarter, easily surpassing second-quarter growth of six percent. Economists expected third-quarter growth of 5.4 percent.

The GDP news is the latest in a long line of favorable headlines that have sparked the iShares MSCI Philippines Investable Market Index Fund to a year-to-date gain of over 41 percent, making the ETF one of the best-performing country-specific funds this year.

Last week, the Philippine government announced it would repurchase $1.46 billion in dollar- and euro-denominated bonds in an effort to pare interest expenses. The move is seen as a significant effort by the Philippines to push for an investment-graded credit rating.

A strong desire for an investment-grade credit rating. Earlier this year, Standard & Poor's finally got around to raising the country's long-term foreign currency-denominated debt to BB+ from BB, the highest rating since 2003. That rating is just one notch below investment grade and it is the same rating S&P has on Indonesia, Southeast Asia's largest economy.

In May, Moody's Investors Service raised its outlook on the Philippines to positive. Last month, the ratings agency upped its rating on Philippine debt to Ba1, one level below investment grade territory.

Inflows to EPHE, the lone ETF exclusively devoted to the Philippines, indicate that investors are buying into the country's investment thesis. In early July, the ETF had just over $142.2 million in assets under management. That number was $171.5 million at the start of trading today.

In the first nine months of 2012, the Philippine economy grew at an average rate of 6.5 percent compared with a growth rate of 3.9 percent through the same period last year.

In a research note, HSBC praised Philippine policymakers for taking "timely measures to counterbalance an anticipated slowdown of demand from China and the eurozone as well as the resilient nature of the services-oriented economy," The Financial Times reported.

Currently trading at $33.32, EPHE is three cents below its intraday high and just 10 cents below its all-time high. The ETF has surged 14.6 percent in the past three months.

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