EXSO CO.,LTD.

HCMC - Standard & Poor’s on Wednesday revised Vietnam’s outlook to stable from negative, citing the government’s successful drive to bring down sky-high inflation. At the same time, the ratings agency also upgraded the outlook for two major banks, namely Vietinbank and BIDV, to stable from negative.

In a statement issued on Wednesday, the ratings agency said that it affirmed Vietnam’s long-term sovereign credit rating at BB- with a stable outlook and the short-term rating at B.

“The outlook revision reflects our assessment of a reduction in the risks to macroeconomic and financial stability in Vietnam,” the agency said in a statement obtained by the Daily.

In 2011, Vietnam shifted its focus from economic growth to macro-economic stability to curb price rises and other uncertainties, including dwindling foreign reserves, a ballooning trade deficit and downward pressure on the dong currency.

Such efforts paid off, as the Government has been able to bring inflation from a high of 23% last August to 8.34% year on year this May by repeatedly hiking rates throughout 2011.

S&P said that the risks of macroeconomic and financial instability “have subsided somewhat since early 2011.”

“We expect Vietnam to maintain these improvements as the Government has expressed its intention to keep price stability high on its policy priorities,” said S&P credit analyst Kim Eng Tan in the statement.

Also on Wednesday, the ratings agency revised up its outlook for the two banks mentioned above.

“Standard & Poor’s Ratings Services on Thursday revised the outlooks on Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and Bank for Investment and Development of Vietnam (BIDV) to stable from negative,” it said.

At the same time, “Standard & Poor’s affirmed its ‘B+/B’ issuer credit ratings on both banks. We also revised the ASEAN scale ratings on BIDV to ‘axBB/axB’ from ‘axBB-/axB’,” S&P said.

The ratings on Vietinbank and BIDV are one notch above the banks’ respective stand-alone credit profiles, reflecting the banks’ “high systemic importance” in Vietnam’s banking system, S&P said.

By Hoang Son - The Saigon Times Daily