Introduction to credit rating
Credit rating service is the assessment of a borrower’s creditworthiness in terms of its ability to fulfill the financial obligation. Any borrower can be assigned a credit rating. A country, a local government, a business or even an individual may have a rating. There are three big rating agencies in the world: Standard & Poor’s, Moody’s and Fitch Ratings, which provide and charge a fee on credit rating service for an organization itself or its debt instrument. Credit rating agencies often use Latin letters to represent their credit rating results. For example, S&P’s ratings range from AAA (excellent) and AA+ to C and D. A debt instrument with BBB- is considered as a speculative debt or a “ghost” bond, mostly unable to fulfill its debt obligation.
In the international debt market, credit rating plays a central role as lender’s willingness to lend depends a lot on strict and honest assessment from credit rating agencies. Meanwhile, the borrower strives to get the highest rating possible because it is an important factor in determining interest rates. Therefore, credit rating agencies need to be independent and objective in assessing financial status of the firm and its ability to repay the debt. Aside from helping enterprises determine whether they can get the loan, it also helps to determine the interest rate of the loan. Since businesses need fund for start-up projects and other costs, being rejected to loan access or bearing a high interest rate will cause more difficulties. Credit rating is also important in helping investors making corporate bond investments. Therefore, borrowers need to constantly maintain a high credit rating. The rating is continually changing based on updated data. A poorly rated debt can surely drag down the entire rating of that organization.
Credit rating service at HVA
Being aware of challenges faced by businesses in accessing private debt market, which is also a brand new market in Vietnam, HVA has been researching and evaluating the need to develop a credit rating system in Vietnam. At the present, there is no professional organization providing credit rating service in Vietnam. CIC under the State Bank of Vietnam is currently providing credit profiles of companies. Firms that need to be rated are mostly unable to access services provided by international CRAs due to technical and financial constraints. With the aim of contributing to providing complete credit rating service for Vietnam’s market, HVA put a target to start implementing credit rating operation in Vietnam.
We are now in the process of researching and completing the final stage of our product. We are planning to cooperate with a well-established credit rating agency and will officially launch our service in the soonest future.
Members of HVA’s Credit rating Committee
1. Mr. Nguyen Doan Hung – Chairman of the Credit Rating Committee
Mr. Hung holds a Master of Science in Financial Management, University of London, UK. Mr. Hung has more than 20 years of experience in financial management. Throughout his career, he served as Director and Assistant to the Governor of the State Bank, Alternate Director of World Bank, Washington, DC, and Vice Chairman of the State Securities Commission.
2. Mr. Nguyen Hoang Linh – Member of the Credit Rating Committee
Mr. Linh holds a Master of Business Administration in Finance and a Doctorate in Strategic Management from Sun Yat-Son University, Taiwan (NSYSU). Linh has more than 20 years of experience in corporate finance. Linh also has 10 years of experience in developing structured products in the financial markets in Taiwan. Besides, Linh had many scientific researches on securities market, corporate governance, credit rating, accounting and auditing.
3. Mr. Nguyen Dinh Thanh – Member of the Credit Rating Committee
He has graduated from Hanoi University, University of Transport and Communications. He is an Professional Auditor which is certified by Academy of Finance and Management Australia (AFMA). He has many years of experience in investments management. Prior to be member of Board of Directors and Director of Investment Banking of HVA Investment Joint Stock Company, he held positions such as Head of Investment of Petro Vietnam Insurance PVI, Investment Manager of Sai Gon Securities Company – Hanoi.
4. Ms Nguyen Thi Thanh Van – Member of the Credit Rating Committee
Ms.Van has graduated from the University of Adelaide, Australia, and has been CFA Charterholder (Certificate of Financial Analysis) at CFA Institute, USA from 2009. With more than 10 years of experience, Ms.Van has conducted many financial projects such as consultancy of divestment for Vietnam Electrical Equipment JSC (GELEX); consultancy of listing for HABECO; consultancy of divestment for State Capital Investment Corporation (SCIC) at Gemadept Corporation (GMD).
5. Ms Angelica B.Viloria – Member of the Credit Rating Committee
Ms. Angelica holds a MBA from the UP School of Economics, Diliman. She has over 23 years of experience in the credit rating field. Currently she is Vice President and Director of Credit Rating, Philippine Rating Services Company (PhilRatings) – the leading credit rating agency in the Philippines, which is recognized by the Philippine Securities and Exchange Commission (SEC) and the Philippine Central Bank (BSP).