Vietnam wins Fitch rating hike on growth, reserves

By BLOOMBERG

MANILA • Vietnam won a sovereign rating upgrade from Fitch Ratings on rising foreign-exchange reserves and strong economic growth, putting the nation closer to investment grade. Bonds and stocks rose.

The rating on the nation’s long-term, foreign currency denominated debt was raised one level to BB, with a stable outlook, Fitch said in a statement yesterday. The upgrade puts Vietnam at the second highest speculative grade and on par with Costa Rica.

Vietnam’s communist government has transformed the nation into one of the most rapidly-growing economies in the world with Fitch forecasting expansion of 6.7% in 2018. The government is focusing on containing debt and reforming its state-owned enterprises, boosting its track record of policy making at a time when emerging markets face pressure from rising US interest rates.

Reserves are forecast to climb to about US$66 billion (RM261.13 billion) by the end of this year from US$49 billion in 2017, while general government debt is likely to decline to below 50% of gross domestic product (GDP) by 2019, according to Fitch calculations.

The budget deficit is estimated to narrow to about 4.6% of GDP in 2018 from about 4.7% in 2017, Fitch said.

The yield on Vietnam’s 4.8% dollar notes due November 2024 fell five basis points to 4.63% yesterday, according to data compiled by Bloomberg.

Those of similar-maturity debt from the Philippines was at 3.65%. Fitch rates the Philippines at BBB, three levels above Vietnam.