Why Vietnam’s Corporate Credit Ratings Are Capped at International Levels

Credit Ratings and Sovereign Ceiling

First and foremost, it’s essential to understand what a credit rating is. It’s a metric that assesses credit risk—the ability of a country or corporation to repay its debts. For Vietnamese companies seeking to raise capital through international bond markets, a credit rating is virtually a “passport” to access global investors. The higher the rating, the lower the borrowing costs; however, achieving a high rating depends not only on internal financial health but also on the sovereign ceiling—the maximum rating a country’s entities can attain.

This is an immutable principle in the credit rating industry. In 2024, the three major credit rating agencies—Moody’s, Fitch Ratings, and S&P Global Ratings—maintained Vietnam’s sovereign rating at stable levels. Specifically, Fitch and S&P assigned a rating of BB+, while Moody’s retained a Ba2 rating. Consequently, no domestic entity, whether a leading private conglomerate or a major state-owned enterprise, can achieve a rating higher than BB+ with Fitch or S&P, or Ba2 with Moody’s.

This means that both state-owned enterprises and private companies share the same sovereign ceiling. A recent example is S&P Global Ratings assigning Vietcombank a BB+ rating, Techcombank a BB rating, and Eximbank a BB‑ rating. Typically, the banking sector enjoys higher credit ratings compared to other sectors. In early 2025, Vinhomes received a Ba2 rating with a stable outlook from Moody’s and a BB- rating with a stable outlook from Fitch.

“Junk” Does Not Mean “Bad”

The term “junk” in credit ratings often leads to misunderstandings. In reality, BB+ is the highest level within the Non-Investment Grade category, just below the Investment Grade threshold (BBB-). Currently, dozens of countries worldwide are rated BB+, BB, or lower by agencies like Fitch, S&P, and Moody’s, placing them in the Non-Investment Grade group. This is not a “junk” category but rather a segment offering higher potential returns with corresponding risks.

In practice, many emerging economies and large corporations have successfully issued international bonds during their BB+ or BB- phases, attracting investors with attractive yields. Indonesia, for instance, remained at BB+ for years before achieving Investment Grade status, yet its companies continued to raise international capital effectively during that period.

Classifying bonds as Investment Grade or Non-Investment Grade merely provides investors with an initial perspective and helps determine what they consider a reasonable interest rate. Beyond the credit rating label assigned by agencies, investment decisions are heavily influenced by the intrinsic strength and potential of the issuing country or entity.

Therefore, a Vietnamese company rated BB+ or BB- is not a sign of weakness or “junk” status but rather a reflection of the characteristics of a developing economy. Understanding the true nature and principles of credit ratings will enable investors and the public to form a fairer, more objective view of Vietnamese enterprises. “Junk” is not synonymous with “bad”; it is a technical term reflecting potential returns relative to risk according to international standards, and Vietnam is steadily progressing toward achieving Investment Grade status in the near future.