“weak institutions and governance strength rather than weak financial background”, Moody's has lowered Vietnam's outlook to Negative.
Believing that the Government's delayed repayment of indirect debt obligations means “weak institutions and governance strength rather than weak financial background”, Moody's has lowered Vietnam's outlook to Negative.
On December 18, Moody's announced to adjust Vietnam's outlook to Negative, ending the time of monitoring Vietnam's credit records since October 9. Moody's believes that there is still a potential risk of delayed repayment of indirect debt obligations of the Government, in the absence of clear solutions to improve coordination among related agencies as well as increasing transparency on debt management guaranteed by the Government.
According to this credit rating agency, late payments reflect an administrative problem rather than a financial weakness. Delayed payments indicate institutional and administrative weaknesses, including the problem of complex administrative procedures that hinder timely and smooth payments.
However, Moody's maintained Vietnam's credit rating at Ba3 for domestic currency, foreign currency and unsecured senior loans. The credit ceiling for long-term bonds issued in foreign currencies remained unchanged at Ba1. The maximum credit level for deposits and bonds in local currency is still Baa3.
Meanwhile, the Ba3 credit rating given by Moody's was based on the country’s strong growth potential, economic diversification, and ability to absorb shocks, including the slowing down in global trade. Moody's expects that the government's direct debt burden will also gradually decrease to about 48% of GDP by 2020, from nearly 53% in 2016. With respect to risks, despite the fact that financial health of Vietnamese banks has improved in recent years, the banking system is still believed to be a major source of risk for Vietnam.
Reaction of Ministry of Finance
According to the Ministry of Finance, that Moody's downgrades Vietnam's credit outlook based on a separate incident to the Government's contingent liabilities, ignoring the comprehensive results Vietnam has achieved in socio - economic development, coping with external shocks, and improving the sustainability of the public debt portfolio, is not reasonable.
“In the press release, Moody's noted that with the focus on supervision and coordination to ensure debt repayment obligations are timely met, the risk of recurring late payment has been significantly relieved.
However, the Ministry of Finance acknowledged that Moody's continuing to monitor Vietnam's credit profile (with Negative outlook) is not commensurate with the drastic and timely guidance of the Government, as well as a series of measures that the Government, the Ministry of Finance, and relevant agencies have implemented in recent years to improve the administrative coordination in the settlement of contingent liabilities of the Government, ensuring no damage to the lender", said the Ministry of Finance.
The Ministry of Finance also affirmed that the Government of Vietnam always strictly fulfills its debt repayment obligations on time as committed to international partners and financial institutions. "This is also evidently seen through the fact that the Vietnamese Government has actively implemented the guarantor's responsibility for payment, even before the lender's official request was sent," the Ministry of Finance said.
The Ministry also added that delayed repayment of government-guaranteed loans will not arise in the near future, which could cause an unnecessary misunderstanding to the community of investors about the Government's ability to repay debts as well as negative impact on Vietnam's prestige and national image on the international arena. The Prime Minister has commanded the Ministry of Finance, relevant ministries, branches and agencies to arrange sources and fulfill the debt repayment obligations when they are due.
In the coming period, the Government of Vietnam will continue to pursue the goal of solidifying the macro-economic foundation, enhancing the internal capacity of the economy, promoting institutional reform and expanding resources in order to ensure solvency, maintain public debt and national financial security while facilitating development.
"In the near future, besides continuing to implement economic reform solutions, the Government together with the Ministry of Finance and the concerned agencies are ready to provide transparent information and theoretical proofs on the Government's serious fulfillment of debt repayment commitments. Thereby, the Ministry of Finance believes that Moody's, credit rating agencies as well as other international organizations will have sufficient information and authentic basis to give a accurate and positive view on credit records of Vietnam ", the Ministry of Finance said.
Read more:The Ministry of Finance’s comment on Vietnam's credit potential downgrade
Source: compiled by VietnamCredit
FAQs
| Agency | Rating | Outlook |
|---|
| Moody's | B2 | Stable |
| S&P | BB- | Stable |
| S&P | BB- | Negative |
| S&P | BB | Negative |
17 more rowsIn Moody's Ratings system, securities are assigned a rating from Aaa to C, with Aaa being the highest quality and C the lowest quality. Moody's was founded by John Moody in 1909, to produce manuals of statistics related to stocks and bonds and bond ratings.
What is the credit rating of Vietnam? ›
Vietnam Credit Rating
| Rating Agency | Rating | Last Update |
|---|
| Standard & Poor's | BB+ | 27 May 2022 |
| Moody's Investors Service | Ba2 | 6 Sep 2022 |
| Fitch Ratings | BB+ | 8 Dec 2023 |
| DBRS | - | |
Reasons why MIS might withdraw a Credit Rating MIS may withdraw a Credit Rating for any of the following reasons: 1) Incorrect, insufficient or otherwise inadequate information: MIS shall withdraw any Credit Rating if, in MIS's opinion: (i) the information available to support the Credit Rating – whether in terms of ...
How do I find my Moody's rating? ›
Type the ticker symbol of the company you want, hit the yellow <CORP> key, then type CRPR and hit <GO>. Bonds are listed by Bloomberg composite ratings. To see Moody's, S&P and Fitch ratings, click on individual bond issues and choose DES from the menu. You can find historical bond ratings for particular issues.
What is the best Moody's credit rating? ›
Much of the innovation in Moody's rating system has been in response to market needs for increased clarity around the components of credit risk or for finer distinctions in rating classifications. Aaa Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
What is the difference between Moody and S&P credit rating? ›
Moody's assigns bond credit ratings of Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, as well as WR and NR for 'withdrawn' and 'not rated' respectively. Standard & Poor's and Fitch assign bond credit ratings of AAA, AA, A, BBB, BB, B, CCC, CC, C, D.
What is moody rating for us? ›
Is Moody's rating reliable? ›
Judicious rating process.
While Moody's credit ratings have proven to be good predictors of creditworthiness, Moody's cannot represent our ratings to be -- nor should investors or other observers expect them to be -- performance guarantees.
How to get credit report in Vietnam? ›
To get your personal Credit report, please come to our office with your ID Card: PCB's Headquarter: Suite 1303B - Vietcombank Building - 198 Tran Quang Khai - Hoan Kiem - Hanoi, Or, Representative office at address: 4th floor, Vietcombank Building, 13-13 bis Ky Dong, Ward 9, District 3, HCM City.
While cash is used for small purchases and street vendors in Vietnam, most establishments accept payments from major credit card providers such as Visa. Hotels, tour operators, boutiques, restaurants, grocery stores, and spas all generally accept international debit and credit cards.
What is the bad debt rate in Vietnam? ›
Specifically, the on-balance sheet bad debt ratio for the banking system was 1.9% in 2021, with a gross bad debt ratio of 7.3%, compared to 1.7% and 5.1%, respectively, in 2020. By the end of July 2023, the on-balance sheet bad debt ratio had increased to 3.56%, with a gross bad debt ratio of 6.16%.
What banks are downgraded by Moody's? ›
Major US banks downgraded by Moody's on worsening outlook
| Webster (WBS.N) | Downgraded to BAA2 from BAA1 |
| Associated Banc-Corp (ASB.N) | Downgraded to BAA2 from BAA1 |
| Old National Bancorp (ONB.O) | Downgraded Senior Unsecured to A1 from AA3 |
| Citizens Financial Corp (CFG.N) | Affirmed senior unsecured at BAA1 |
11 more rowsAug 8, 2023
Unfortunately, there's no easy way to remove defaults from your credit profile, especially if they're accurate. Lenders and credit reference agencies are legally obliged to report credit defaults as they appear, no matter how minor they are and even if they're not your fault.
Why do Moody's withdraw ratings? ›
The Credit Rating has been withdrawn because Moody's Investors Service believes it has insufficient or otherwise inadequate information to support the maintenance of the Credit Rating. Please refer to Moody's Investors Service's Withdrawal Policy, which can be found on our website, www.moodys.com.
What is Moody's rating in Cambodia? ›
Which country has AAA credit rating? ›
Some of the top examples include Australia, Canada, Denmark, Germany, Sweden, Switzerland, Norway, and Hong Kong. These are all countries that generally carry a credit rating of AAA.
What is Moody's rating on China? ›
Singapore, December 05, 2023 -- Moody's Investors Service ("Moody's") today changed the outlook to negative from stable on China's government credit ratings while affirming China's A1 long-term local and foreign-currency issuer and senior unsecured ratings and the (P)A1 foreign-currency senior unsecured shelf rating.
What is Moody's rating of usa? ›
The US is the only sovereign to which Moody's assigns an economic strength score of "aaa," the highest score possible, reflecting the sheer scale of the economy (nominal GDP was nearly $26 trillion in 2022), consistent resilience to shocks, and the unique role that the economy plays globally.
