New regulations on credit rating agencies in Vietnam

In addition to auditing companies, credit rating agencies (CRA) are an important private gatekeeper for a well-functioning capital market. Decree 88/2014 introduces a comprehensive regulations on credit rating agencies for the first time in Vietnam. Under Decree 88/2014,

  • Any CRA must obtain a practising licence from the Ministry of Finance, who will need to consult with the State Bank of Vietnam and the Ministry of Planning and Investment before granting the licence. While Decree 88/2014 does not make it clear, it appears that an offshore CRA (e.g. S&P, Moody's, and Fitch) may also need to be licensed by the MOF to provide cross-border credit rating services. On the other hand, under WTO Commitments, cross border supply of credit references and analysis services is not subject to any market access requirement.
  • Sovereign ratings are not subject to Decree 88/2014 and a CRA is not allowed to publish a credit rating about an issuer or a security if it does not have rating contract with the relevant issuer.
  • A CRA must have, among other things, a minimum paid up capital of VND 15 billion, 15 qualified analysis and a credit rating committee of at least 5 qualified members.
  • A CRA is subject to various requirements to prevent conflict of interest including (i) compensation paid to an CRA must not be linked to the rating issued to the relevant issuer, (ii) a CRA must make public a list of top paying customers, (iii) all key contents of the rating methodologies must be published, (iv) compliance with IOSCO’s Code of Conducts and (v) reporting line between the rating committee and the rating analysis.