On October 25, the workshop “The role of credit rating in credit risk management” organized by the Vietnam Banking Association (VNBA) in collaboration with FiinRatings Joint Stock Company (FiinRatings) and S&P Global Ratings took place in Hanoi.
The workshop provided different perspectives from domestic and international experts representing commercial banks, investment funds, underwriters, etc.
Effective tool to help financial activities take place transparently
Speaking at the workshop, Dr. Nguyen Quoc Hung, Vice Chairman and General Secretary of the Vietnam Banking Association, affirmed that credit rating is an effective tool to help activities in the financial market take place transparently and publicly, thereby promoting the safe and sustainable development of financial and monetary markets and capital markets.
Dr. Nguyen Quoc Hung, Vice Chairman and General Secretary of Vietnam Banks Association spoke at the workshop.
If banks are highly rated by reputable organizations, it will help the bank have many advantages such as: Capital mobilization, business activities, lending, or borrowing capital at low interest rates from domestic and international organizations.
As for businesses, a good credit rating will help them quickly access preferential bank capital, as well as receive preferential treatment in terms of prices and services when transacting with domestic and foreign partners.
Mr. Nguyen Quang Thuan - General Director of FiinRatings said that market members need to join hands to take the first steps even when there are no mandatory regulations on credit ratings. Currently, Vietnam still lacks conditions for people to invest long-term, people's money mainly flows to banks with nearly 7 million billion VND in deposits.
Insurance companies also mainly deposit money in banks and government bonds, with very low interest rates that cannot ensure maximum profits for customers. Mr. Thuan believes that credit ratings will support investors to have more basis to diversify investment activities, thereby diversifying long-term capital sources for the economy.
According to Mr. Thuan, credit rating is not a "magic wand", but for the market to develop, there must be trust. Enterprises need to build transparent profiles so as not to depend too much on bank loans. This requires the efforts of many parties, not only from management agencies such as the Ministry of Finance, the State Bank, ... but also from enterprises, banks, investors ...
At the same time, he also expressed his wish that credit rating is not only to provide information but we want through credit rating results to be able to form a yield curve.
Mr. Nguyen Quang Thuan - General Director of FiinRatings spoke at the conference.
The rate of businesses using credit ratings is still low.
Dr. Nguyen Quoc Hung also pointed out that credit rating in Vietnam still has many limitations, and there are no specific mandatory regulations such as independent auditing.
In addition, there are only 3 credit rating organizations, FiinRatings, VIS Rating and Saigon Ratings, with limited operations. In addition, the rate of enterprises using credit ratings is still low. Enterprises are not really interested in and consider credit ratings as a necessary need.
According to him, credit rating services have been developed in the world for decades. Meanwhile, in Vietnam, since Decree 88/2014/ND-CP was issued regulating the licensing and operation of credit rating organizations, the official credit rating market in Vietnam has just been formed.
Discussion and discussion on the role of social enterprises in Vietnam's capital market.
Sharing the same opinion with Mr. Hung, Ms. Luong Thuy Ngan, Director of VCBS Corporate Finance Consulting, shared that the current coverage of credit ratings is not large, causing difficulties in providing advice. When customers come to us, they often have questions about credit ratings. Many people do not understand whether the rating results are good or bad, and how to compare the results with each other.
At the same time, for payment guarantees, the credit rating of the enterprise is the first filter to consider whether to proceed with payment guarantees or not.
In particular, at present, when the form of capital mobilization through the bond channel is popular. However, many businesses issuing bonds without collateral find it difficult to mobilize capital because there is no channel for customers to be sure of investing in.
Ms. Ngan believes that there should be credit ratings for these businesses. Independent objective data from credit rating agencies will be a channel for investors to trust instead of completely trusting and depending on the issuing and consulting organizations.
According to FiinRatings' data, Vietnam's corporate bond/GDP ratio is currently 14%, ranking 4th in the Southeast Asian market, after Malaysia (57%), Singapore (37%) and Thailand (14%).
It is worth mentioning that in Asia, Vietnam's credit rating is considered a "latecomer" when the first unit was established in 2017. Meanwhile, other countries in the region have had credit rating units since the 90s .
Thu Huong
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