Credit rating advance to help next capital market phase

The push to elevate Vietnam’s sovereign credit rating to at least Baa3 under Moody’s or BBB under S&P and Fitch before 2030 is gaining momentum.

At the Vietnam’s Credit Spotlight 2025 conference hosted by S&P Global Ratings and FiinRatings on February 27, Trinh Quynh Giao, CEO of asset management company PVI AM, cited examples such as Masan and other Vietnamese enterprises currently facing foreign borrowing costs of 8 per cent annually with short maturities, whereas businesses in similar industries and of comparable scale in the region secure financing at half that.

“Some regional enterprises even obtain long-term loans at lower interest rates and then reinvest or lend in Vietnam. This puts Vietnamese businesses at a significant disadvantage,” Giao said.

Upgrading Vietnam’s sovereign credit rating not only affects the government’s international borrowing costs but also impacts leading private enterprises such as Masan and Vingroup, as well as exporters. “It also enhances the country’s attractiveness for direct and indirect foreign investment, reinforcing its reputation in global financial markets,” added Giao.

Pham Thi Thanh Tam, deputy director of the Department of Banking and Financial Institutions at the Ministry of Finance, emphasised the vital role of credit rating agencies in developing Vietnam’s capital markets and welcomed cooperation between domestic and international credit rating firms.

“With the presence of international credit rating agencies in Vietnam, we believe that domestic credit rating activities will align with global standards, enhancing transparency in the capital market,” said Tam.

Nguyen Quang Thuan, CEO of FiinRatings, underscored the need to unlock capital markets, especially long-term infrastructure bonds with maturities of up to 30 years, to support Vietnam’s ambitious plans for expressway, nuclear power, and renewable energy investments.

“From a credit rating perspective, we aim to see Vietnam’s standing improve, but sustainable and safe economic growth is paramount. The economy still heavily relies on bank credit, with a credit growth target of 16 per cent,” he said.

Thuan also highlighted that Vietnam’s public debt currently exceeds $150 billion, and an improved sovereign credit rating would enable the country to raise capital at lower costs. Private enterprises’ foreign borrowing rates are also directly influenced by the sovereign rating.

“Countries like Malaysia, Indonesia, and the Philippines access much cheaper financing. For instance, Indonesia issues five-year bonds in USD at just 5 per cent, slightly above the Fed’s rate. Meanwhile, Masan’s foreign currency bond yields are significantly higher,” Thuan said. “If we want to engage public capital, transparency, beyond mere regulatory compliance, is essential.”

FiinRatings has been sharing insights with international rating agencies and advocating for Vietnam’s sovereign credit upgrade in line with global standards to better support the local capital market.

Andrew Wood, director of Sovereign Ratings at S&P Global Ratings, expressed strong impressions of Vietnam’s recent structural and institutional reforms.

“Our sovereign credit ratings on Vietnam are underpinned by the country’s strong economic growth, moderate government debt levels, and generally sound external debt position. Vietnam’s stable policy settings and positive trade orientation attract consistently high investment from multinational corporations, maintaining the foundation for rapid economic development,” Wood said.

He also pointed out Vietnam’s current challenges, particularly limited transparency compared to regional peers, and outlined expectations for the country’s credit rating improvement in the near future.

“Vietnam’s economic outlook remains strong despite geopolitical uncertainties and trade frictions. Sufficient external buffers and a solid fiscal position help mitigate risks,” he said. “The maturation of Vietnam’s institutional settings, sustained fiscal policy improvements, or a much stronger trade and investment performance over the coming years would add support to Vietnam’s sovereign credit profile.”

Rated corporate bond issuances in Vietnam still trail behind regional peers, though efforts to enhance credit rating culture aim to expand the market significantly.

FiinRatings, a credit rating agency partnered with Standard & Poor's Global Ratings, has announced its inaugural credit rating for MB Shinsei Finance Co., Ltd., trading as Mcredit, as A- with a ‘stable’ outlook.

S&P Global Ratings, the world’s leading provider of independent credit ratings, announced on February 25 that S&P Global Inc. has agreed to acquire a 43.4 per cent minority shareholding in Vietnam’s leading credit rating agency, FiinRatings.