Vietnam gets a Moody’s downgrade on weak banks, stuttering economy
By The Associated Press | September 28, 2012
In this photo taken April 10, 2011, a boat passes by the abandoned Van Phong port in southern Vietnam. THE CANADIAN PRESS/AP, TuoI Tre Newspaper, Van Ky
HANOI, Vietnam – Moody’s Investors Service has downgraded Vietnam’s credit rating, citing weaknesses in its banks and a stuttering economy.
The downgrade to B2 from B1 for government bonds issued in local or foreign currency announced Friday means the country would face higher borrowing costs if it sells new bonds.
It could also deter foreign investment, adding to problems in an economy once seen as an emerging Asian powerhouse.
The problems in the banking system stem from a credit boom in 2009 and 2010. Much of the money lent is now considered bad debt and a lack of transparency within the banks is adding to investor jitters.
The banks are now unwilling to lend money, causing the economy to slow to 5 per cent growth after a decade of 7 per cent-plus growth.