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VN set to license three credit rating firms by 2025

Update: December, 17/2014 - 08:48

Viet Nam plans to grant licences to a maximum of three credit rating firms by 2025, according to a draft decision. — Photo vietstock.vn

HA NOI (VNS) — Viet Nam plans to grant licences to a maximum of three credit rating firms by 2025, according to a draft decision.

The draft, which was recently presented for comments, indicates that the credit rating development plans are aimed to be approved by 2020 to achieve the country's 2030 vision. The plan seeks to conduct a credit rating for all corporate bond issuances by 2025. In addition, the draft aims to grant licences to a maximum of five credit rating firms by 2030.

The credit rating development must be in line with the development of the domestic equity and bond market to enhance transparency and promote capital building through the stock market, as well as to protect the legitimate rights of investors.

The Ministry of Finance said that credit rating provided investors with information used to evaluate the financial capacity and payment capacity of issuers of financial instruments on the stock market.

As of October 2014, nearly 700 stocks were listed on the stock market of Viet Nam with a total capitalisation of VND1,191 trillion (US$56.18 billion), which is equivalent to 33.23 per cent of the country's gross domestic product.

Currently, no credit rating firm is licensed in the country.

The Finance Ministry said the establishment of credit rating will initially aid the development of the corporate bond market as the stock market remains at a small scale.

The ministry said that the number of credit rating firms will be limited for each period to avoid unforeseen developments, which might result in poor credit rating quality.

The Government issued Decree 88/2014/ND-CP in September, which discussed the credit rating services and conditions for eligible credit rating firms. — VNS

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