Credit rating agency is in the cards: MoF
The Ministry of Finance has proposed to establish the country's first credit rating agency to increase corporate bond market and assist businesses in mobilising capital for their business and production.
Under the proposal approved by the Ministry of Finance (MoF), the agency's operation will be organised in the form of either a liability limited company with two members and more or a joint stock one.
A credit rating agency is expected to have a legal capital of VND15 billion (US$714,000). The agency will rate private and State-owned corporations, finance, banking, insurance and non-financial institutions.
Under the proposal, shareholders or members of this agency are local and international individuals and organisations.
Capital contributions to set up the agency must comply with the rules of the existing Enterprise Law stipulating that a total ownership ratio of each organisation or individual is not allowed to exceed 20 per cent of the credit rating agency's capital contribution.
It said any organisation or individual with more than 5 per cent stake in a credit rating agency is not permitted to contribute capital to establish, purchase or own stake of another credit rating agency.
The proposal also stipulates that organisations are not permitted to use State-capital to set up a credit rating agency.
The Ministry of Finance proposed that a credit rating agency is not allowed to make capital contributions to set up another credit rating agency.
According to the Ministry of Finance, credit ratings are opinions about credit risk published by a rating agency. They express opinions about the ability and willingness of an issuer, such as a corporation, state or city government, to meet its financial obligations in accordance with the terms of those obligations.
Credit ratings are also opinions about the credit quality of an issue, such as a bond or other debt obligation, and the relative likelihood that it may default.
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