Ratings Methodology
S&I Ratings
Ratings Methodology
S&I Ratings provides credit ratings after analyzing qualitative and quantitative factors and discussing with the issuer about factors that may impact future default risk. S&I Ratings' rating methodology covers evaluation criteria from macro to micro levels to ensure that key risks are comprehensively considered. All rating methodologies are updated and adjusted annually to align with practical and business environments.
Rating process
The time required to perform credit rating for an issuer/debt instrument will range from four (04) to eight (08) working weeks, starting from the date S&I Ratings receives all required information and data. The credit rating process includes the following steps:
01
Receiving Information and Introducing Services
- Receiving service requests and information from the issuer.
- Consulting and answering questions about the implementation process and related information for the rating.
- Signing the Credit Rating Service Contract with the issuer.
02
Personnel Assignment and Information Collection
- Assign personnel, including the Analysis Team and the Rating Committee.
- Collect information and data from the issuer and other reliable sources.
03
Discussion with Issuer Representatives
The management and representatives of the issuer meet and discuss with the Analysis Team regarding issues related to the credit rating process.
04
Analysis, Evaluation, and Approval of Credit Rating Results
- Conduct analysis and prepare reports based on the collected data.
- The Rating Committee evaluates, votes, and approves the rating results.
05
Notification of Results to Issuer
- S&I Ratings sends customers the draft report and rating results.
- In case of disagreement with the results, the issuer needs to provide additional information and new data for review. If there is no reliable basis to change the credit rating and the issuer still disagrees with the notified results, S&I Ratings will exercise the right to retain the results.
06
Result Announcement
The credit rating results are published on the S&I Ratings' website within 24 hours after the official decision is made.
07
Rating Monitoring
The rating results will be periodically reviewed by S&I Ratings or when unusual events occur that may affect the current credit rating.
Credit Rating Scale
Long-term Credit Rating
A long-term credit rating is the assessment provided by S&I Ratings for issuer/debt instruments with a principal repayment term of 1 year or more, on a scale from 'AAA' – the highest credit quality, to 'D' – the lowest credit quality. The scale reflects the risk of default, increasing progressively from top to bottom. For example, a company rated AAA is expected to have a very high and stable ability to make payments over the next 12-24 months. Conversely, a company rated C is likely to be unable to meet its debt obligations when due.
According to international investment practices, ratings from BBB and above are considered "Investment Grade," while ratings from BB and below are considered "Speculative Grade."
| Rating | Rating description |
|---|---|
| AAA | Indicates that the issuer/debt instrument has the 'Lowest' risk of default and an 'Extremely high' credit quality. |
| AA | Indicates that the issuer/debt instrument has a 'Very low' risk of default and a 'Very high' credit quality. |
| A | Indicates that the issuer/debt instrument has a 'Low' risk of default and a 'High' credit quality. |
| BBB | Indicates that the issuer/debt instrument has a 'Relatively low' risk of default and a 'Moderate' credit quality. |
| BB | Indicates that the issuer/debt instrument has a 'High' risk of default and a 'Low' credit quality. |
| B | Indicates that the issuer/debt instrument has a 'Very high' risk of default and a 'Very low' credit quality. |
| CCC | Indicates that the issuer/debt instrument has a 'Extremely high' risk of default and a 'Extremely low' credit quality. |
| CC | Indicates that the issuer/debt instrument faces the risk of being unable to partially meet its debt obligations when due. |
| C | Indicates that the issuer/debt instrument faces the risk of being unable to partially or fully meet its debt obligations when due. |
| D | The issuer/debt instrument has become default. |
Note: Ratings from AA to CCC can be adjusted by adding a '+' or '-' sign to more clearly indicate the credit quality within the same rating category.
Short-term Credit Rating
Short-term credit rating is an objective opinion provided by S&I Ratings on the ability to fully and timely meet debt obligations with a principal repayment term of no more than 12 months for the issuer.
| Rating | Rating description |
|---|---|
| A1 | Has the ability to fully and timely fulfill financial obligations at a 'Very High' level. |
| A2 | Has the ability to fully and timely fulfill financial obligations at a 'High' level. |
| B1 | Has the ability to fully and timely fulfill financial obligations at a 'Moderate' level. |
| B2 | Has the ability to fully and timely fulfill financial obligations at a 'Low' level. |
| C | Has the ability to fully and timely fulfill financial obligations at a 'Very Low' level. |
Ratings Methodology
Comprehensive Assessment: The credit rating methodology comprehensively covers risk factors from macro to micro levels and is systematically structured to provide comparable credit ratings across industries.
Forward-Looking Analysis: Credit ratings offer forward-looking opinions based on the analysis of macro risks, industry risks, business operations, and future projections of the issuer.
Market Position Identification: The business operations of the issuer are compared with industry averages and peer companies, ensuring a comprehensive view of market position.
Inclusive Evaluation Criteria: The analysis includes both qualitative and quantitative factors, providing a balanced and detailed assessment.
External Support Consideration: The methodology also considers external support such as government and other group members to evaluate the impact on credit quality.
Periodic Updates: The methodology is updated and adjusted annually or as needed to align with the realities and business environment in Vietnam.
Issuer Credit Rating
Issuer credit rating is an objective assessment of a company's ability to fully and timely fulfill its debt obligations in the future. This rating applies to the issuer's debt obligations in general and is not specific to any particular debt obligation.
Debt Instrument Credit Rating
Debt instrument credit rating is an objective opinion on the ability to fully and timely fulfill a specific type of debt obligation. This assessment considers the characteristics of each type of obligation, such as payment priority, collateral, guarantors, and other terms.
Ratings Methodology
| Methodology | Updated | Details |
|---|---|---|
| Credit Rating Methodology for Non-Financial Corporations | 01/01/2025 | |
| Credit Rating Methodology for Banks | 01/01/2025 | |
| Definitions, Symbols, and Terms of Credit Ratings | 01/01/2025 |
Event of Default
Default occurs when the issuer is unable to fulfill one of its financial obligations when due. S&I Ratings defines events leading to the default of the issuer as follows:
- The issuer is unable to fulfill part or all of its financial obligations (interest payments or principal payments) when due as committed in credit agreements. Financial obligations include loans from credit institutions, financial leases, bond issuances, and other interest-bearing commitments.
- The issuer is undergoing bankruptcy procedures or has been requested to initiate bankruptcy procedures by creditors due to its inability to fulfill financial obligations.
- Financial obligations are being negotiated for restructuring or changes in terms related to the duration and amout of payments when the issuer is unable to fulfill its obligations.
In cases where the issuer delays payment due to technical errors unrelated to its ability to fulfill obligations, we do not consider this an event of default.
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