Global credit rating agency Fitch Ratings has upgraded the long-term senior secured debt ratings of Vietnam to BBB- from 'BB+', effectively removing the ratings from being under criteria observation.

This rating decision, according to Fitch, is a direct result of the application of Fitch’s new sovereign rating criteria, introduced in September 2025, which for the first time integrates specific recovery assumptions into sovereign debt ratings.

While the secured bonds have seen an upward adjustment, this action does not constitute a change to Vietnam's long-term foreign currency issuer default rating ( IDR ), which the agency last affirmed at BB+ with a stable outlook in June 2025.

Structural protections, recovery analysis

The upgraded BBB- rating applies specifically to Vietnam’s 30-year Brady bonds, originally issued on March 12 1998. These instruments are positioned one notch above the country’s IDR because of their unique secured nature and the additional recovery benefits they offer to investors.

The principal on the discount bond is fully collateralized at maturity by US treasury zero-coupon bonds, while the par bond principal carries 50% collateralization. Both bond types also feature rolling interest collateral, supporting Fitch’s expectation of average recovery prospects for Vietnam’s senior debt when combined with these dedicated secured assets.

Future rating drivers

Vietnam’s broader credit standing remains heavily influenced by its environmental, social and governance ( ESG ) profile, Fitch states, particularly regarding governance indicators.

The Southeast Asian country, according to Fitch, holds an ESG Relevance Score of 5 for political stability and rights, as well as for the rule of law, institutional and regulatory quality, and control of corruption. These scores reflect Vietnam’s 41st percentile ranking in the World Bank governance indicators, which denotes moderate institutional capacity and a low level of participation in the political process.

Moving forward, the ratings for these secured bonds will remain sensitive to any shifts in the underlying sovereign IDR. Positive rating actions could be triggered by sustained economic growth that reduces the GDP per capita gap with peers or a significant reduction in fiscal risks associated with state-owned enterprises.

Conversely, a sharp decline in foreign exchange reserves or the crystallization of contingent liabilities on the sovereign balance sheet, Fitch points out, could lead to negative rating pressure.