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VietNamNews

VN credit rating raised a notch

Update: June, 08/2012 - 10:52

HA NOI — Standard&Poor's has increased Viet Nam's credit rating from a negative to stable level while retaining the local long-term currency rating at BB- and the short-term at B.

In comparison with other ASEAN countries, Viet Nam's long-term scale rating moved from axBB to axBB+ while the short-term rating stayed at axB.

The ratings reflect S&P's opinion that the country's macroeconomy and finance risks have reduced. Key indexes, including credit growth, foreign reserve and interest rate in Vietnamese dong, have improved over the past 18 months.

S&P said tightened monetary policies have helped improve trust in the Government's determination to stabilise prices.

However, it said there were risks in macroeconomy resulting from loosing policies and decreasing demand.

The agency added that Viet Nam would retain tightened monetary policies until macroeconomic instability risks decreased to a one digit inflation rate and financial indexes stayed at the current level or improved in the next two or three years.

S&P could lower Viet Nam's credit ratings if one of the indexes downgrades.

S&P also increased the credit ratings of Bank for Investment and Development of Viet Nam (BIDV) and Viet Nam Bank for Industry and Trade (Vietinbank) from stable to positive, assigning a B+ short-term counterparty credit rating and B long-term rating respectively.

S&P said the outlook showed that BIDV and Vietinbank played an important role in the country's banking sector as well as highly valued support from the Vietnamese Government to the industry.

S&P has so far accessed the ratings of Viet Nam's five big banks including BIDV, Vietinbank, Vietcombank, Sacombank and Techcombank.

However, the agency kept the rating of Viet Nam Coal and Mineral Industries Group (Vinacomin) at BB- with a positive outlook.

According to S&P, it has not changed the rating because it believed Vinacomin would not receive support from the Government.

S&P added the rating could be lowered next year if Vinacomin's money flow weakened due to increasing coal output on the domestic market. It said Vinacomin would depend on debts for its operations if flow was weak, decreasing making credit protection measures and liquidity. — VNS

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