Business credit rating: "Passport" for the integration

(HNM) – In countries, corporate credit rating (financial strength rating, referred to as rating) is a popular activity, but in Vietnam, this is still quite new. Currently, not many domestic enterprises conduct credit rating, but this is a “passport” for the internationalization of corporate brands in particular and integration in general.

Seen from the PVI case
Recently, PetroVietnam Insurance Joint Stock Corporation (PVI) has officially announced its corporate credit rating. Accordingly, PVI has been recognized by AMBest – one of the prestigious credit rating organizations in the world, recognized by the US Securities and Exchange Commission – a financial credit rating of B + (strong capacity ) and the issuer credit rating at BBB – (maintaining the ability to fulfill good financial commitments). It should be added that A.M.Best has more than 100 years of experience, implementing the rating process for about 3,500 insurance companies in 65 countries. The ranking results of A.M.Best are considered as a very important reference tool for customers and investors before making related decisions. Thus, PVI’s ranking results have been highly appreciated. From an analytical point of view, both ratings above are seen as positive, ie if the financial market continues to be favorable, PVI may achieve a higher rating. Dr. Roger Sellek, CEO of A.M.Best said, this is the “passport” for the internationalization of the PVI brand. Simultaneously with this result, PVI has become the first enterprise in the financial insurance sector of Vietnam to be evaluated (and highly ranked) by an international financial credit rating agency.

Credit ratings are increasingly important
The rating is currently popular in many countries around the world. However, in Vietnam, this is still a very new activity. Up to this point, although there have been a number of domestic units conducting credit rating (although the quality of the rating unit still has many problems), the number of domestic enterprises performing the rating is not much. According to another “big man” in this field, Standards & Poor (USA), credit rating is the current assessment of risks, credit quality, ability of the entity (enterprise) … in meeting financial obligations and objectives fully and on time. According to Moody’s, credit rating is the assessment of the financial quality of the subject based on fundamental credit analysis and expressed through the system of symbols from AAA to C. In other words, this Is a general assessment of qualitative and quantitative views of an independent organization over a company’s business activities, strength and financial capacity based on a perception of a company’s business business entries, balance sheets compared with international quantity and quality standards (of the rating agency). The review organization also takes into account the company’s growth commitments in all aspects.

The need for a corporate credit rating is obvious. First of all, from the corporate side, credit rating helps companies expand domestic and foreign capital markets, reducing their dependence on bank loans; While at the same time ensuring stable funding for the company, highly ranked firms can maintain capital markets in almost any situation, even when the capital market has adverse fluctuations. . The higher the credit rating, the lower the interest rate, investors are willing to receive a lower interest rate for a safer partner … As for banks, this is the basis for credit management to limit the risk at the target level and assist in the debt classification and the risk provisioning, towards the goal of maximizing profits …

Credit ratings are becoming increasingly important in the financial sector. According to economists, on the one hand, if there is no domestic credit rating company, Vietnamese enterprises must rely on foreign rating firms when issuing bonds on the market. domestic; on the other hand and more importantly, this is the basic information for foreign investors to say “no” or “yes” before deciding to invest.

Want to go far must have a vision
Back to the case of PVI, the financial credit rating of B + (strong financial capacity) is evaluated equivalent to the BBB (reliable financial capacity) of Standard & Poors (many countries have officially announced received the conversion of the rating system of these two financial credit rating agencies). On this basis, PVI has set a target of rapidly expanding operations in the international market, restructuring the business according to international standards, continuing to seek a reputable foreign strategic shareholder, and at the same time. listing PVI shares on foreign stock exchanges …

However, in reality, a rating (good) is not a gift. Enterprises that want to achieve must have a strategic vision and try. For example, PVI took 14 years of “preparation” and 2 years of really “getting to work”. Even when starting to prepare for rating assessment, the entity had to anticipate the risk of not being recognized or not being highly ranked … But the most important thing for a business is the standard process. financial credit rating will assist the unit in changing the system (management) according to international standards, enhancing competitiveness and professionalism.

Up to this point, a number of large enterprises have conducted ratings. For example, the “giant banks” in Vietnam such as Asia, International, Engineering, Investment – Development … have been announced by Moody’s financial credit results. Banks are rated on the basis of financial strength, profitability, liquidity ratios, credit risk management and capital adequacy (PVI is still the only enterprise in in the field of insurance – finance is ranked) … In the integration period, if enterprises want to go far, they must have a vision and credit rating assessment, performed by reputable organizations. in the “passport” for the internationalization of the corporate brand.

(Bắc Hà, n.d.)

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