Credit Rating Scales

CREDIT RATING SCALES

Saigon Ratings established and applied consistently the credit rating scales using alphanumeric symbols. This symbol system aims to provide a system of standards used to evaluate and compare creditworthiness of the debt obligations and issuers, in accordance with the following basic principles:

Rating scales should be clear, easy to understand, and ensure the credit rating grades are comparative;
The credit rating scales are ranked from the highest to lowest on the ability to fully and timely fulfill financial obligations of the issuers.

The credit rating scales of Saigon Ratings include long-term credit rating scales and short-term credit rating scales. This distinction aims at expressing and reflecting the objective and independent assessment of Saigon Ratings on the ability to fully and timely fulfill financial obligations of the issuers in the long term and short term. The credit rating scales describe the ability to meet financial commitments from the highest rating level (Extremely strong capacity) to the lowest rating level (Payment default on financial commitments).

Saigon Ratings provides clear, simple and understandable definitions of each categories in the rating scale and applies consistently to all types of issuers.

ISSUER CREDIT RATING
ISSUE CREDIT RATING

Long-term Issuer Credit Rating

Category	Definition
vnAAA	An entity rated ‘vnAAA’ has extremely strong capacity to meet its financial commitments. ‘vnAAA’ is the highest issuer credit rating assigned by Saigon Ratings.
vnAA	An entity rated ‘vnAA’ has very strong capacity to meet its financial commitments. It differs from the highest-rated entities only to a small degree.
vnA	An entity rated ‘vnA’ has strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than entities in higher-rated categories.
vnBBB	An entity rated ‘vnBBB’ has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to weaken the entity’s capacity to meet its financial commitments.
vnBB	An entity rated ‘vnBB’ is less vulnerable in the near term than other lower-rated entities. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions that could lead to the entity’s inadequate capacity to meet its financial commitments.
vnB	An entity rated ‘vnB’ is more vulnerable than the entities rated ‘vnBB’, but the entity currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the entity’s capacity or willingness to meet its financial commitments.
vnCCC	An entity rated ‘vnCCC’ is currently vulnerable and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments.
vnCC	An entity rated ‘vnCC’ is currently highly vulnerable. The ‘vnCC’ rating is used when a default has not yet occurred but Saigon Ratings expects default to be a virtual certainty, regardless of the anticipated time to default.
vnR	An entity rated ‘vnR’ is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others.
vnSD & vnD	An entity is rated ‘vnSD’ (selective default) or ‘vnD’ if Saigon Ratings considers there to be a default on one or more of its financial obligations, whether long-term or short-term, including rated and unrated obligations but excluding hybrid instruments classified as regulatory capital or in nonpayment according to terms. A ‘vnD’ rating is assigned when Saigon Ratings believes that the default will be a general default and that the entity will fail to pay all or substantially all of its obligations as they come due. An ‘vnSD’ rating is assigned when Saigon Ratings believes that the entity has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. A rating on an entity is lowered to ‘vnD’ or ‘vnSD’ if it is conducting a distressed exchange offer.
*Ratings from ‘vnAA’ to ‘vnCCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories.

Short-term Issuer Credit Rating

Category	Definition
vnA-1	An entity rated ‘vnA-1’ has strong capacity to meet its financial commitments. It is rated in the highest category by Saigon Ratings. Within this category, certain entities are designated with a plus sign (+). This indicates that the entity’s capacity to meet its financial commitments is extremely strong.
vnA-2	An entity rated ‘vnA-2’ has satisfactory capacity to meet its financial commitments. However, it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than entities in the highest rating category.
vnA-3	An entity rated ‘vnA-3’ has adequate capacity to meet its financial obligations. However, adverse economic conditions or changing circumstances are more likely to weaken the entity’s capacity to meet its financial commitments.
vnB	An entity rated ‘vnB’ is regarded as vulnerable and has significant speculative characteristics. The entity currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the entity’s inadequate capacity to meet its financial commitments.
vnC	An entity rated ‘vnC’ is currently vulnerable to nonpayment that would result in an ‘vnSD’ or ‘vnD’ issuer rating and is dependent upon favorable business, financial, and economic conditions to meet its financial commitments.
vnR	An entity rated ‘vnR’ is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others.
vnSD & vnD	An entity rated ‘vnSD’ (selective default) or ‘vnD’ has failed to pay one or more of its financial obligations (rated or unrated), excluding hybrid instruments classified as regulatory capital or in nonpayment according to terms, when it came due. An entity is considered in default unless Saigon Ratings believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. A ‘vnD’ rating is assigned when Saigon Ratings believes that the default will be a general default and that the entity will fail to pay all or substantially all of its obligations as they come due. An ‘vnSD’ rating is assigned when Saigon Ratings believes that the entity has selectively defaulted on a specific issue or class of obligations, excluding hybrid instruments classified as regulatory capital, but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. An entity’s rating is lowered to ‘vnD’ or ‘vnSD’ if it is conducting a distressed exchange offer.

Saigon Ratings uses rating symbols: ‘vnAAA’, ‘vnBB’, or ‘vnCC’ to represent its relative credit risk assessment. In which, the rating symbol ‘vnAAA’ represents the best solvency; rating symbol ‘vnC’ or ‘vnD’ represents the weakest solvency or can be understood as the rating of insolvency or default.

The short-term rating scale has fewer grades than the long-term rating scale, starting from ‘vnA-1’ (indicating the ability to fully and timely perform the debt obligation at the highest level) to the ‘vnD’ (denotes that the issuer has lost its ability to pay its debt obligations). Therefore, typically each short-term rating notch may correspond to a range of long-term rating notches. For example, the short-term credit rating ‘vnA-1+’ can correspond to the long-term credit ratings: ‘vnAAA’, ‘vnAA+’, ‘vnAA’ and ‘vnAA-’.

Short-term and long-term credit ratings have a close relationship: if an organization’s long-term credit rating is downgraded, the short-term credit rating may be downgraded accordingly.

Long-term Issue Credit Rating

Category	Definition
vnAAA	An obligation rated ‘vnAAA’ has the highest rating assigned by Saigon Ratings. The obligor’s capacity to meet its financial commitments on the obligation is extremely strong.
vnAA	An obligation rated ‘vnAA’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitments on the obligation is very strong.
vnA	An obligation rated ‘vnA’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitments on the obligation is still strong.
vnBBB	An obligation rated ‘vnBBB’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor’s capacity to meet its financial commitments on the obligation.
vnBB	An obligation rated ‘vnBB’ is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor’s inadequate capacity to meet its financial commitments on the obligation.
vnB	An obligation rated ‘vnB’ is more vulnerable to nonpayment than obligations rated ‘vnBB’, but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitments on the obligation.
vnCCC	An obligation rated ‘vnCCC’ is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitments on the obligation.
vnCC	An obligation rated ‘vnCC’ is currently highly vulnerable to nonpayment. The ‘vnCC’ rating is used when a default has not yet occurred but Saigon Ratings expects default to be a virtual certainty, regardless of the anticipated time to default.
vnC	An obligation rated ‘vnC’ is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher.
vnD	An obligation rated ‘vnD’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘vnD’ rating category is used when payments on an obligation are not made on the date due, unless Saigon Ratings believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The ‘vnD’ rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘vnD’ if it is subject to a distressed exchange offer.
*Ratings from ‘vnAA’ to ‘vnCCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories.

Short-term Issue Credit Rating

Category	Definition
A-1	A short-term obligation rated ‘A-1’ is rated in the highest category by Saigon Ratings. The obligor’s capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitments on these obligations is extremely strong.
A-2	A short-term obligation rated ‘A-2’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitments on the obligation is satisfactory.
A-3	A short-term obligation rated ‘A-3’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken an obligor’s capacity to meet its financial commitments on the obligation.
B	A short-term obligation rated ‘B’ is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligor’s inadequate capacity to meet its financial commitments.
C	A short-term obligation rated ‘C’ is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation.
D	A short-term obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless Saigon Ratings believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is subject to a distressed exchange offer.

Short-term and long-term credit ratings have a close relationship: if an organization’s long-term credit rating is downgraded, the short-term credit rating may be downgraded accordingly.