What is the credit rating process in Vietnam? What requirements does an analyst of credit rating contract need to ensure?
What is the credit rating process in Vietnam?
According to the provisions of Article 26 of Decree No. 88/2014/ND-CP, a credit rating agency shall develop its credit rating process involving the following basic steps:
- Negotiation on and signing of credit rating contracts with organizations subject to credit rating;
- Selection of and assignment of tasks to analysts participating in credit rating contracts under Article 29 of this Decree;
- Formation of credit rating councils to perform credit rating contracts under Article 30 of this Decree;
- Collection of information, analysis, assessment and grading of the ability of rated organizations to honor their debt obligations;
- Approval of credit rating results;
- Publication of reports on credit rating results;
- Monitoring, updating and periodical evaluation of reports on credit rating results under credit rating contracts until these contracts expire;
- Expiration of credit rating contracts.
Credit rating agencies shall disclose their own credit rating processes and updated versions thereof (if any) on their websites.
What is the credit rating process in Vietnam? What requirements does an analyst of credit rating contract need to ensure?
What are credit rating contracts in Vietnam?
According to the provisions of Article 27 of Decree No. 88/2014/ND-CP, the credit rating contract is construed as follows:
Credit rating contracts in Vietnam
1. Credit rating contracts must ensure the principles prescribed in Article 5 of this Decree.
2. A credit rating contract shall be made in writing and contain the following principal details:
a/ Names, addresses and representatives of the credit rating agency and organization subject to credit rating;
b/ Credit rating purposes, scope and activities;
c/ Time limit for performance of the contract;
d/ Conditions and terms on disclosure of credit rating results; dd/ Credit rating service charge;
e/ Rights, obligations and responsibilities of the contracting parties in the course of performance of the contract;
g/ Obligation of the contracting parties to keep confidential information under Article 39 of this Decree;
h/ Monitoring, periodical evaluation and updating of reports on credit rating results until the contract expires;
i/ Cases in which the contract shall immaturely expire and responsibilities of the contracting parties;
k/ Settlement of disputes.
Thus, a credit rating contract is a contract performed based on the above contents and on the following principles:
- Independence and impartiality.
- Truthfulness.
- Transparency.
- Compliance with current laws, this Decree and terms of credit rating contracts upon the performance of credit rating.
What requirements does an analyst of credit rating contract need to ensure?
According to the provisions of Article 29 of Decree No. 88/2014/ND-CP on analysts of credit rating agencies as follows:
- For each credit rating contract, a credit rating agency shall select, assign tasks to and decide on the number of analysts based on the scope and characteristics of such contract. An analyst participating in each credit rating contract must meet the following basic requirements:
+ Meeting all the criteria and conditions prescribed in Article 21 of Decree No. 88/2014/ND-CP;
+ Not participating in the management of the credit rating agency;
+ Not being concurrently a member of the credit rating council for such credit rating contract;
+ Not falling into the cases of conflict of interest specified in Clause 2, Article 38 of Decree No. 88/2014/ND-CP when participating in such credit rating contract. In the course of performance of the contract, if there is a conflict of interest of the analyst specified in Clause 2, Article 38 of Decree No. 88/2014/ND-CP, the credit rating agency shall terminate the participation of the analyst in the credit rating contract. The agency may replace the analyst or add new analysts when necessary.
In addition, analysts have the following tasks:
+ To collect information, analyze, assess and grade the ability of rated organizations to honor their debt obligations as assigned by their credit rating agency;
+ To report on tentative credit rating results to the credit rating council as assigned by their credit rating agency;
+ To report to the credit rating council and request termination of their participation in credit rating contracts in the cases of conflict of interest specified in Article 38 of Decree No. 88/2014/ND-CP;
+ To observe the code of conduct.
LawNet