Moody's annual sovereign report on Vietnam provides an updated analysison the rating and does not constitute a rating action.
The report notes that Vietnam's B1 foreign currency and local currencyratings were derived from a methodological assessment of low economicresilience and low financial robustness. Strong growth over the pastdecade has led to large developmental gains, but has not been matched byimprovements in institutional quality, in comparison to the country'srating peers.
Vietnam's fiscal and debt metrics are still well-positioned compared tothose of its rating peers, but event risk has risen as a result ofinconsistent macroeconomic policies that have not sufficiently addressedoverheating pressures.
Moreover, the deterioration in Vietnam's external payments position,coupled with an unfavorable outlook for contingent liabilities, ispressuring the rating downward.
A change in the rating outlook to stable would depend largely on thesuccess of the government's recent tightening measures in arrestinginflationary pressures and containing exchange rate volatility. However,if the already low level of foreign exchange reserves were to erodefurther, the rating would be subject to additional downward pressure.
The principal methodology used in this rating was Moody's Sovereign BondMethodology published in September 2008.
The report is entitled "Credit Analysis: Vietnam." It can be accessed at www.moodys.com .
Please see ratings tab on the issuer/entity page on Moodys.com for thelast Credit Rating Action and the rating history.