VIS Rating - An Affiliate of Moody's presents our credit outlook for 2025 - Vietnam Credit Conditions
☑️ In 2025, we expect the credit conditions for Vietnam will stabilize after improving substantially over the past year. Policy focus and measures to support economic activity will drive domestic business activity and consumption. Public spending, FDI, and exports are key to maintaining Vietnam’s robust economic outlook.
☑️ Default rates in the corporate bond market will continue to decline, as corporate cash flows improve to support debt servicing, and issuers benefit from stronger market confidence and access to refinancing opportunities. Nonetheless, corporate leverage remains high, and it would require a long period of cash flow recovery to strengthen corporate balance sheets meaningfully.
Source: VIS Rating
“We expect business conditions for corporates operating conditions in 2025 will to improve gradually in 2025, supported by increased public spending and improved sentiment in the real estate market. More government investment in public infrastructure will boost business activities for companies in construction, materials, and transportation sectors. Resolved legal issues and better land-use plans will spur new real estate developments and cash flow to property firms.
However, with foreign reserves at a five-year low in 2024, the State Bank of Vietnam will have limited room to manage currency volatility. If the foreign currency outflows increase and trigger further devaluation in VND, we may expect to see higher interest rates, that will in turn, dampen growth for domestic businesses.” – Nguyen Dinh Duy, CFA, Director – Senior Analyst, VIS Rating.
Source: Hanoi Stock Exchange, VIS Rating
“Corporate defaults in 2025 will remain skewed towards companies with high leverage and significant mismatches in timing of cash flows and debt maturities, particularly those in residential real estate, hospitality, and construction sectors. These sectors make up the majority of almost VND220 trillion of bonds maturing in 2025.
Many of these issuers have previously defaulted on coupon payments, with slow progress in resolving and recovering defaults. These issuers will likely face significant refinancing challenges for their upcoming debt maturities, and hence, pose high default risk to investors.”– Nguyen Ly Thanh Luong, CFA, ACCA, FMVA, Lead Analyst, VIS Rating.
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