[NEWS] - S&P upgraded the country’s credit rating to BB+: What benefits does Vietnam get?

After recovering strongly from the Covid-19 epidemic, Vietnam’s economy has been upgraded to BB+ by S&P Global Rating. The credit rating upgrade will help businesses gain a higher position as well as have a positive view of Vietnam in the international capital market.

On May 30, FiinGroup, a company specializing in financial analysis and credit rating information services, announced that Vietnam has been upgraded to the credit rating of S&P Global Ratings. According to specific analysis by FiinRatings, on May 26, S&P Global Ratings upgraded Vietnam’s long-term national credit rating to BB+ with a "stable" outlook. According to the announcement of FiinGroup, S&P announced to maintain the BB level, raising the rating outlook from "Stable" to "Positive".

According to the S&P methodology, when the rating outlook is “positive,” there is a high probability that the rating will be upgraded within 12-24 months. Previously, Vietnam was rated from BB- to BB+. Vietnam has maintained its credit rating of BB- for a long time.

After the strong economic recovery after the Covid-19 epidemic, as well as the strong development of exports and foreign direct investment (FDI), thanks to the important factors mentioned by S&P, which are the strong improvements in submit administrative procedures of the Government of Vietnam on the process of performing foreign debt obligations guaranteed by the Government. Besides the strengths, S&P also recorded points for improvement including GDP growth not as forecasted by S&P, slow disbursement of public investment and some weaknesses of Vietnam’s banking - financial system. Vietnam was upgraded to BB+ which is the highest rating in the BB group, which means its ability to meet its debt obligations is low, heavily impacted by negative events from the business, economic and financial environment. ". The BB+ level is still considered “speculative” by the international financial and investment community in investment decisions related to Vietnam. However, it is a score close to the BBB-, which is defined as the "investment grade" of the S&P. At that time, international investors will consider Vietnam as a lower risk and expect a low level of return (for example through lending rates or bonds issued by Vietnamese enterprises) at a low level. 

To be able to assess the rating score, S&P applies 5 main groups of criteria for ranking countries and territories, including: institutions and policies; economic growth quality; balance of payments strength, including foreign exchange reserves and balance of payments surplus; fiscal balance including budget revenue and expenditure, public investment and public debt; and money-credit market.

The upgrade also helps "raise the ceiling" of ratings for all Vietnamese businesses by S&P. However, FiinRatings also noted that this credit rating ceiling has significantly reduced the credit rating division among debt instrument issuers in the international capital market.

With the attraction of the current growth momentum, Indochina Holdings provides services on financial consulting, consulting on FDI capital, mobilizing short-term and long-term investment capital with the lowest interest rates. This is the time when businesses need to have the clearest and most correct direction, with the motto of our company, Indochina Holdings is committed to always accompanying and making every effort to be a solid bridge for businesses. industry at home and abroad.

Ngoc Duc

Compiled from Thanh Nien Newspaper