September 28, 2012 / 5:01 AM / 7 years ago

Moody's cuts Vietnam's govt rating to B2, outlook stable

Sept 28 (Reuters) - Moody’s Investors Service has downgraded Vietnam’s foreign- and local-currency government bond ratings by a notch to B2, citing stresses in the banking industry from a prolonged credit boom and a darkening economic backdrop.

The agency said the ratings outlook was now stable, meaning that upside and downside risks are balanced.

“The ratings downgrade was driven by the intensification of banking system vulnerabilities because of the overhang from a prolonged credit boom and the subsequent tightening in policy,” the agency said in a statement released on Friday.

Vietnam’s long-term foreign currency (FC) bond ceiling remained at B1, while its long-term FC deposit ceiling was downgraded to B3 from B2. Its local currency bond and deposit ceilings were also unchanged at Ba2.

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