First credit rating agency to come online next year
First credit rating agency to come online next year
The first credit rating agency (CRA) is expected to be launched in the country next year after the Government issued legal framework for operations of such institutions.
The Ministry of Finance is fielding suggestions for the decree on establishment and operation of CRAs and will submit it to the Government in October. It is expected that a special business model will show up on the debt market.
Credit rating means considering whether an individual or agency can fulfill financial obligations as expected. CRAs will provide consultancy on credit ratings of organizations and debt instruments such as bonds, valuable papers, preferred shares, debts and bank loans.
The draft decree also regulates the credit rating process. After signing contracts with customers, a CRA will set up a credit rating council and select analysts. The experts will collect information, assess debt solvency of customers and report results to the council.
After the council has adopted the results, the credit rating agency will follow up and update credit ratings of enterprises.
A CRA will have a managing director for the credit rating sector, an assessment council and analysts that have at least five years of experience in the fields of finance, banking, accounting and auditing.
The CRA has to report on operation situation, change in shareholders and major changes to the Ministry of Finance each year.
The CRA will have to announce credit rating method and process, rating and explanation, ethical standards, list of shareholders and ownership ratios on its official website.
Statistics of customers’ credit rating results must be available on the website, while related data must be saved for at least five years.
The market is expected to have between two and four agencies initially. The enterprises are non State-owned and are joint stock or limited companies with two members or more.
Local and foreign individuals and organizations are allowed to contribute capital to CRAs. Each enterprise will have a minimum statutory capital of VND15 billion.
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