Vietnam Electricity (EVN) Achieves its First and Positive Credit Rating from Fitch Ratings

Vietnam’s electricity company Vietnam Electricity, or EVN, is one step closer to issuing US dollar bonds and strengthening its financing capacity, following an endorsement by Fitch Ratings of its credit profile.

Now assigned an Issuer Default Rating (IDR) of ‘BB’ with a ‘Stable Outlook’ for long-term foreign currency, EVN’s ratings align with Vietnam’s sovereign rating. EVN’s sustainable financing strategy is supported by technical assistance from the World Bank.

“This positive rating enables EVN to issue international bonds, diversify our financing sources, and reassure domestic and foreign institutional investors. We are now on a stronger footing to deliver more reliable electricity to Vietnam,” said Dinh Quang Tri, Vice President of EVN. 

The World Bank’s Energy and Extractives Global Practice supported the credit rating exercise through a combination of financing and advisory support, including by appointing Mizuho Bank to prepare for credit rating readiness and the subsequent rating exercise, an exercise which the Global Infrastructure Facility (GIF) actively managed. After this readiness work concluded in February 2018, EVN appointed Fitch Ratings to conduct the rating exercise.

“This positive credit rating will give assurance to the private sector and commercial lenders about the financial and technical capacity of EVN and will alter their risk perception in signing long-term power purchase agreements (PPAs) and extending credit. The credit rating will also provide comfort to institutional investors, both domestic and foreign, for any planned bond issuance by EVN,” said Ousmane Dione, World Bank Country Director for Vietnam.

Fitch’s ratings assignment is premised on EVN’s strong linkages to the state, its market position, and robust demand for electricity, coupled with solid collection rates.

“Creating an enabling environment for more private sector investment and helping EVN benefit from the discipline that comes with access to capital markets, is what took place in Vietnam.  We expect this process to help the financial health of Vietnam’s power sector in particular, and the country in general as it diversifies its sources of financing to the benefit of consumers and taxpayers in the long-run,’” said Jordan Schwartz, Co-chair of the GIF Governing Council and Director of the Infrastructure, PPPs & Guarantees Group, World Bank.

Vietnam’s development record over the past 30 years has been remarkable. Economic and political reforms under Đổi Mới, launched in 1986, have spurred rapid economic growth and development and transformed Vietnam from one of the world’s poorest nations to a lower-middle-income country. Vietnam’s economic performance in 2017 has been resilient, reflecting robust export-oriented manufacturing, strong domestic demand and the gradual rebound of the agriculture sector, with GDP growth estimated at 6.8 percent in 2017 – the fastest expansion in the past ten years.

Propelled by favorable domestic and external conditions, Vietnam’s economy posted its strongest first-quarter growth in a decade, with real GDP expanding nearly 7.4 percent year-on-year during the first quarter of 2018. The electricity sector has been critical in supporting economic development by achieving almost universal electricity access and reducing technical and commercial losses, in line with international best practice.

The Global Infrastructure Facility (GIF) is housed within the World Bank as a partnership among governments, multilateral development banks, private sector investors, and financiers, and provides support for project preparation, structuring and advisory to clients in emerging markets.

For more information, please see: https://www.fitchratings.com/site/pr/10031946