Well, S&P strikes again--guess Friday is when they like to issue the bad news.
(RTTNews) - Standard & Poor's on Friday lowered Vietnam's local currency long-term sovereign credit rating to 'BB-' from 'BB', to reflect the revised methodology and assumptions adopted by the agency.
The foreign currency long-term rating was affirmed at 'BB-'. The agency maintained 'negative' outlook, as the economy is under the risks of near-term economic and financial instability.
"Under the revised methodology, we are narrowing the gaps between the local and foreign currency ratings, where these had existed, for many sovereigns," S&P's credit analyst Kim Eng Tan said.
"This is because we believe that governments are likely to have fewer incentives to differentiate between their local and foreign currency debt in the event of debt restructuring, given the increasing globalization of markets," Tan added.
The revised rating reflects Vietnam's low-income economy and developing financial system and policy framework, which is partly offset by strong economic growth prospects, the agency said.
S&P assessed that the resilience of Vietnam's banking sector to new financial or economic shocks was weakened by the recent macroeconomic volatility. It also observed that domestic liquidity was reduced by outflows of resident capital.
The transfer and convertibility assessment of Vietnam was lowered to 'BB-' from 'BB'. S&P said the ratings could stabilize at the current level if risks to Vietnam's financial sector stability decline.
(RTTNews) - Standard & Poor's on Friday lowered Vietnam's local currency long-term sovereign credit rating to 'BB-' from 'BB', to reflect the revised methodology and assumptions adopted by the agency.
The foreign currency long-term rating was affirmed at 'BB-'. The agency maintained 'negative' outlook, as the economy is under the risks of near-term economic and financial instability.
"Under the revised methodology, we are narrowing the gaps between the local and foreign currency ratings, where these had existed, for many sovereigns," S&P's credit analyst Kim Eng Tan said.
"This is because we believe that governments are likely to have fewer incentives to differentiate between their local and foreign currency debt in the event of debt restructuring, given the increasing globalization of markets," Tan added.
The revised rating reflects Vietnam's low-income economy and developing financial system and policy framework, which is partly offset by strong economic growth prospects, the agency said.
S&P assessed that the resilience of Vietnam's banking sector to new financial or economic shocks was weakened by the recent macroeconomic volatility. It also observed that domestic liquidity was reduced by outflows of resident capital.
The transfer and convertibility assessment of Vietnam was lowered to 'BB-' from 'BB'. S&P said the ratings could stabilize at the current level if risks to Vietnam's financial sector stability decline.
