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Apr 13, 2020 / 18:16

Fitch revises outlooks on Vietnam major state-run energy, electricity firms to Stable

The ratings are at the same level as the Vietnam sovereign rating.

Fitch Ratings has revised the outlooks on Vietnam Electricity (EVN), National Power Transmission Corporation (EVNNPT) and Vietnam Oil and Gas Group (PVN) to Stable from Positive, while affirming the three companies' Issuer Default Ratings and senior unsecured ratings at 'BB'. 

 Source: Fitch Ratings. 

EVN's ratings reflect its Standalone Credit Profile (SCP), which is at the same level as the Vietnam sovereign rating. Under Fitch's Government-Related Entities Rating Criteria, EVN's ratings will be equalized to that of the sovereign in case of any weakening in its SCP given the company's strong linkages with the state.

PVN's ratings are capped by those of the sovereign under Fitch's Government-Related Entities Rating Criteria given the company's strong linkages with the state. PVN's SCP is assessed at 'BB+'.

EVNNPT's ratings are based on the consolidated profile of EVN, which owns 100% of EVNNPT, in line with Fitch's Parent and Subsidiary Rating Linkage criteria. The consolidated rating approach is driven by strong linkages between EVNNPT and its parent. EVNNPT's SCP is assessed at 'BB+'.

On April 9, Fitch revised the outlook on Vietnam's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Positive and affirmed the rating at 'BB'.

According to Fitch, the outlook revision reflects the impact of the escalating Covid-19 pandemic on Vietnam's economy through its tourism and export sectors, and weakening domestic demand.

The rating agency projects Vietnam's GDP growth to slow to 3.3% in 2020 from 7.0% in 2019, on account of the pandemic. This would be the lowest annual growth rate since the mid-1980s.