S&P rates Vietnam bonds BB-

Standard & Poor's said it assigned its BB- credit rating to Vietnam's (foreign currency BB-/positive/B; local currency BB/positive/B) proposed $500 million maiden global bond issue maturing 2016.

This follows S&P's revision of its outlook on the long-term sovereign ratings on Vietnam to positive from stable. At the same time, the sovereign ratings were affirmed.

"The bond issue represents Vietnam's first foray into the international debt capital markets since the restructuring of its defaulted bank loans in 1998," said S&P credit analyst Agost Benard. "It therefore marks an important step in the country's long transition toward a market economy, one that is increasingly seeking to leverage on greater international integration."

According to S&P, the sovereign ratings on Vietnam are supported by its moderate overall and external debt levels, strong export-led growth prospects, and conservative economic management underpinned by supportive external creditor relations. The ratings, however, are constrained by weak public finances, numerous structural and institutional deficiencies, including the lack of transparency in policy making and data provision, and limited monetary flexibility.

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