Achieving such an uppgrade would lower the country’s cost of funding, facilitate large-scale infrastructure development, and support the stock market by unlocking access to a wider group of global institutional investors, VinaCapital chief economist Michael Kokalari and senior economist Thái Thị Việt Trinh pointed out in their recent report.

Fitch recently upgraded Việt Nam’s long-term senior secured debt to BBB-, marking the first time any Việt Nam sovereign-linked instrument has been rated investment grade.

The Government has also outlined a clearer road map to achieve investment-grade status by 2030.

Recent developments, along with VinaCapital’s discussions with major credit rating agencies, reinforce the view that an upgrade is achievable on a quicker timeline, according to the report titled “Việt Nam’s Path to an Investment-Grade Rating.”

“In short, Việt Nam already meets most of the quantitative criteria required for an upgrade and only needs to address a limited set of qualitative issues, which we believe will receive heightened attention as recognition of the importance of achieving an upgrade grows,” Kokalari said.

“Việt Nam is rated one notch below investment grade by S&P and Fitch and two notches below by Moody’s.”

An upgrade could have an even greater impact on Việt Nam’s stock market than the recent FTSE Russell Emerging Market equity reclassification.

In other countries, first-time investment-grade upgrades have coincided with outsized equity gains.

India’s stock index rose by 308 per cent and Thailand’s by 150 per cent between two years before and two years after the upgrades.

These upgrades also triggered significant foreign capital inflows across equities, bonds and foreign direct investment, contributing to sharp increases in foreign-exchange reserves.

Achieving investment-grade status is becoming increasingly urgent as Việt Nam seeks to fund ambitious infrastructure projects.

Large-scale developments that rely on imported technologies, such as high-speed rail and power generation, require substantial foreign-currency financing, making lower sovereign borrowing costs particularly important.

According to VinaCapital analysts, Việt Nam must address three key issues to secure an investment-grade rating.

First, financial-sector protections need to be strengthened through larger foreign-exchange reserves, improved bank asset quality and capitalisation, tighter lending standards and limits on excessive leverage.

Second, policy and legal predictability must improve through clearer Government decision-making, more predictable policy cycles, closure of regulatory gaps in financial supervision and corporate oversight, and stronger legal protections for foreign investors.

Third, data transparency needs to be enhanced through the publication of more detailed external accounts data, including short-term private debt, foreign-exchange forward positions, state-owned enterprise and public-private partnership liabilities, and standardised bank asset-quality metrics such as non-performing and restructured loans.

Once achieved, maintaining investment-grade status will require sustained discipline. After gaining BBB- status in 2012, Turkey was downgraded back to non-investment grade partly due to weakened external liquidity buffers.

Việt Nam faces similar downside risks if pro-growth policies – such as rapid credit expansion through state-owned banks or large capital allocations to major conglomerates – outpace supervisory and capital-adequacy safeguards.

Institutional, capital market reforms accelerate

Việt Nam has already made significant progress in strengthening its institutional foundations.

Reforms are being driven by Resolution 66, which took effect in April 2025 and aims to establish a modern, rules-based legislative framework, address legal overlaps and strengthen enforcement and compliance.

Complementary reforms are also digitalising the state’s information architecture under the new Law on Data, including the launch of the National Data Centre and national databases that standardise and open more state datasets including machine-readable, up-to-date legal texts.

Alongside the push for a rating upgrade, Việt Nam is advancing major capital market reforms, including establishing international financial centres in HCM City and Đà Nẵng, strengthening the corporate bond market, and meeting remaining requirements for an MSCI Emerging Market upgrade.

Achieving investment-grade sovereign status would be one of the most important catalysts for Việt Nam’s capital-market development. Analysts estimate that an upgrade could reduce borrowing costs by up to 1.5 percentage points, significantly lowering the cost of capital across the economy and expanding access to long-term funding from pension funds, insurers and sovereign wealth funds.

Source: VNS

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