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Vingroup’s credit rating: from “stable” to “negative”

Vingroup’s credit rating: from “stable” to “negative”

Thursday 17, 10 2019
Vingroup chose to stop being rated so Fitch no longer has enough information to carry out credit ratings on this group.
The global credit rating agency Fitch Ratings has announced that it will stop provide credit rating on Vingroup (stock code: VIC). According to this agency, the reason behind this was due to the fact that "Vingroup had chose to stop". Fitch shared that it will no longer have enough information to maintain the assessment and "will no longer provide rating results" for Vingroup. A representative of Vingroup confirmed the information and emphasized that it had "actively withdrawn" from the service. However, the corporation declined to explain why.

Credit rating is a service provided by companies like Fitch, Moody, Standard & Poor or VietnamCredit at the request of each business. Credit rating results of these prestigious companies are often one of the important requirements when businesses want to raise capital in the international market.
Fitch first released a credit rating report for Vingroup in November 2012, with a B+ for both long-term local and foreign currency debt issuers criteria. The outlook was rated “stale” then. 

Vingroup's B+ rating continued to be maintained by Fitch in subsequent reporting periods and in the latest ranking report. However, in the October 2018’s credit rating report, Vingroup's outlook was lowered from Stable to Negative. Fitch explained that this rating reflects "high risk" in Vingroup's business activities.
On September 12, Standard & Poor's (S&P) credit rating agency also announced to maintain the credit rating of Vingroup at B+ and the company's outlook was changed from Stable to Negative as well.

Both S&P and Fitch informed that Vingroup continues to increase the use of debt to invest heavily in the automotive industry, which is expected to suffer losses in the early stages, increasing the risk of financial leverage.

S&P forecasts that the annual investment capital of Vingroup will be from 20,000-25,000 billion VND; in which auto manufacturing business activity will account for 40 - 45% of capex growth. Vingroup will need revenue growth of at least 45% in 2020 to make up for increasing leverage.

Mr. Nguyen Viet Quang, Vice President and General Director of Vingroup, said that investing in the automobile sector is "highly risky", so the lower credit rating is inevitable. "Credit rating standards are like that, if you do not want to be downgraded, the only way is not to participate in it," Vingroup CEO then shared.
The VinFast complex, which was poured nearly USD 1.5 billion by Vingroup as of the end of March 2019, also achieved a breakthrough when the car factory was inaugurated in mid-June, only after 21 months, 3 months earlier than planned. The first Vinfast Fadil cars were delivered to customers on June 17, Lux A2.0 and Lux S A2.0 models were delivered at the end of July.
That Vingroup “opted out” of credit rating means that the foreign credit rating agencies will not have enough information to assess this business, and this will cause difficulties for investors as well as partners who intend to work with this group when they do not have a useful reference from credit rating report provided by those companies.

However, the problem will be solved if investors use VietnamCredit's company reports. We can give credit ratings not only to Vingroup but also to all of its subsidiaries. Our company is a pioneer in this field in Vietnam and over the past two decades has provided company reports, which include all the latest information from financial statements, business situation analysis to credit rating, that help investors make a accurate investment or loan decision.

Please visit our business information platform and send us the name of the company you need information of. We will process your request immediately and submit your report within 3 working days.
Compiled by VietnamCredit from:
Economy News

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