HÀ NỘI — Fitch Ratings on Thursday upgraded Việt Nam's long-term senior secured debt ratings to 'BBB-' from 'BB+', following the removal of the ratings from Under Criteria Observation.

The rating action reflects the application of Fitch's new Sovereign Rating Criteria from September 2025 and the inclusion of recovery assumptions into sovereign debt ratings for the first time.

Long-term senior secured debt ratings are one notch above Việt Nam's Long-Term Foreign Currency Issuer Default Ratings (LT FC IDR). These debt instruments comprise the 30-year Brady Bonds issued on 12 March 1998. 

Principal on the Discount Bond is fully collateralised at maturity by US Treasury zero-coupon bonds, while principal on the Par Bond is 50 per cent collateralised. Both bonds feature rolling interest collateral.

This move shows Fitch's expectation of average recovery prospects for Việt Nam's senior unsecured debt and the additional recovery benefits derived from the secured portion of the debt instruments. This does not constitute a change to Việt Nam's LT FC IDR.

On June 20, 2025, Fitch confirmed Việt Nam's LT FC IDR at 'BB+' with a Stable Outlook.

According to the Ministry of Finance, officials are establishing a mechanism for periodic and regular dialogue with international credit rating organisations, including Fitch, Moody's and S&P, to not only provide data as required by these organisations, but also to closely coordinate with ministries and sectors to prove the strengths of institutions and the macroeconomic stability and growth potential of Việt Nam.

Fitch's upgrade of the debt instrument to BBB- is also the result of close coordination and timely information provided on the structure of Brady bond debts between the Ministry of Finance and Fitch.

The finance ministry said it will continue to coordinate with Fitch and credit rating agencies as well as other international organisations to continue a full and updated assessment of Việt Nam's credit records.

According to Fitch, Việt Nam’s forthcoming rating action and upgrade will depend on macroeconomic policy and performance, as well as public finances.

Sustained high growth without creating economic vulnerabilities will reduce the GDP per capita gap with rating peers, while also strengthening the economic policy framework and improving the transparency of policy decisions and data.

A significant reduction in fiscal risks, particularly those associated with contingent liabilities stemming from the large State-owned enterprise sector and broader high leverage of the economy will help the upgrade, Fitch said. — BIZHUB/VNS