Vietnam: Credit rating agencies shall develop credit rating methodologies

23:10, 05/10/2014

On September 26, 2014, the Government of Vietnam issued the Decree No. 88/2014/NĐ-CP on credit rating services.

Vietnam: 08 steps for a credit rating agency to develop its credit rating process

Doanh nghiệp xếp hạng tín nhiệm phải xây dựng phương pháp xếp hạng tín nhiệm, Nghị định 88/2014/NĐ-CP

According to Article 32 of the Decree No. 88/2014/NĐ-CP of Vietnam’s Government, credit rating agencies shall develop credit rating methodologies to analyze and evaluate the ability of rated organizations to honor their debt obligations. Credit rating methodologies must include both quantitative and qualitative evaluation methodologies. A credit rating methodology must evaluate basic risks and their impacts on the ability of rated organizations to honor their debt obligations, including:

- Macro risks;

- Market and business environment risks;

- Strategic risks;

- Governance risks;

- Personnel risks;

- Financial risks;

- Other risks as evaluated by the credit rating agency.

Note: Credit rating agencies shall use credit rating methodologies in a systematic and consistent manner for each debt obligation and each production or business line. Periodically, credit rating agencies shall review credit rating methodologies and hypotheses they have used and adjust them when necessary.

Concurrently, credit rating agencies shall disclose on their websites basic contents of their credit rating methodologies.

View more details at the Decree No. 88/2014/NĐ-CP of Vietnam’s Government, effective from November 15, 2014.

Ty Na

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