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Thursday, October 6, 2022

Vietnam’s ratings rise one notch to Ba2

By Van Phong

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HCMC – Moody’s Investors Service (Moody’s) yesterday upgraded Vietnam’s long-term issuer and senior unsecured ratings to Ba2 from Ba3 and changed the outlook to stable from positive.

The upgrade reflects the country’s growing economic strength compared to its peers and greater resilience to external macroeconomic shocks.

The result was thanks to effective policies, reflecting financial stability backed by constrained borrowing costs, fiscal prudence and improved government liquidity, Moody’s reported. 

The economy benefits from supply chain reconfiguration, export diversification and continued inbound investment in manufacturing, Moody’s said, hoping that the situation would remain stable and Vietnam continues to improve its economic competitiveness.

The low capitalization levels of state-owned banks coupled with high credit growth and potential risks from the real estate sector can pose a challenge to the economy if a shock occurs.

Vietnam’s foreign trade may be affected by regional and global geopolitical tensions, higher imported input prices and the uncertain growth outlook of the country’s key trading partners.

Vietnam is the only one in the Asia-Pacific and one of the four countries to have its ratings raised a notch by Moody’s since early this year.

S&P Global Ratings in late May also upgraded Vietnam’s currency sovereign credit ratings to BB+ with a stable outlook, demonstrating that the economy would keep recovering as travel restrictions were removed and vaccination rates improved.

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