Moody's upgrades Vietnam

Moody's Investors Service said it upgraded Vietnam’s issuer and senior bond ratings to B1 from B2, long-term foreign-currency bond ceiling to Ba2 from B1 and local-currency country risk ceiling to Ba1 from Ba2. The outlook is stable.

According to the agency, the key drivers of the rating action are an emerging track record of macroeconomic stability, a strengthening in the balance of payments and external payments position and an easing in the contingent risks from the banking sector.

Moody’s said Vietnam's sovereign credit profile is still marked by important challenges. Capital levels in the banking system remain inadequate, especially in the context of the continued weakness in asset quality; risks from the state-owned enterprises sector persist, posing important constraints to the improving health of the banking system and domestic demand; and the government's fiscal position has eroded over the past few years, driven by weaker revenue performance, the agency said.

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