Vingroup stops participating in Fitch credit rating program

July 2, 2019 | 06:22 am PT
Vingroup stops participating in Fitch credit rating program
VinFast's sedan is seen at the Paris Motor Show in France on October 2, 2018. Photo by VnExpress.
Fitch will no longer provide assessments of Vingroup’s credit rating after the latter chose to stop being rated.

The global rating agency said Tuesday it will no longer provide ranking results for Vingroup. Vingroup representatives confirmed the above information to VnExpress, saying the group had "actively withdrawn" from Fitch’s programme. They did not elaborate.

Corporation credit rating is a service provided by esteemed financial organizations such as Fitch, Moody’s, or Standard & Poor’s at the request of businesses. The credit rating results are often an important requirement when businesses want to raise capital in the international market.

Together with Standard & Poor's and Moody's, Fitch Ratings is one of the three world's most prestigious credit rating organizations.

Fitch first assessed Vingroup’s creditworthiness in November 2012, giving it a "B+"Default Rating for both foreign and local-currency debt issuer categories, as well as a "stable" outlook.

Vingroup maintained its B+ rating consistently until its latest credit assessment. However, in its October 2018 credit rating report, Vingroup’s outlook was lowered from "stable" to "negative" for its expansion into car manufacturing.

The adjustment followed Vingroup’s earmarking $3.1 billion for capital expenditure for its auto venture, of which $1.4 billion was debt funded, Fitch said last October.

The "negative outlook" assessment reflected "Vingroup's heightened business risk and our estimates that leverage, defined as net debt/adjusted inventory, is likely to rise to 58 percent in 2018, before falling to 36 percent in 2019," the ratings agency said.

But Vingroup vice president and CEO, Nguyen Viet Quang, said that the company had foreseen this. "Investing in auto manufacturing is risky and therefore being downgraded is unavoidable," he told VnExpress.

"The only way not to be downgraded is not doing this project in the first place."

Vingroup’s VinFast $1.5 billion car manufacturing complex in Hai Phong inaugurated a new automobile factory in the middle of June, three months ahead of schedule. The corporation’s first cars, which were VinFast Fadil CUVs, were delivered to customers on July 17.

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