In Vietnam, Hanoi Power Corporation (EVNHANOI) has received a credit rating of BB with a stable outlook from the global credit rating agency Fitch.
With the rating, the subsidiary of state-owned utility Vietnam Electricity, has been placed on a stronger footing to scale up financing through more diversified sources including international capital markets, for instance by issuing long-term bonds.
Fitch’s rating of EVNHANOI, announced on July 29, is on par with both Vietnam’s sovereign rating and that of EVN, making it the first such utility in Vietnam and one of a select few in the region to achieve this landmark.
EVNHANOI’s credit profile is supported by its dominant market position in electricity distribution in the capital of Hanoi, its stable and diversified customer base, and low receivables.
If EVNHANOI can maintain financial performance and establish a track record of independent tariff setting mechanism and automation, its stand-alone rating can be further strengthened.
The World Bank’s Energy and Extractives Global Practice supported the credit rating exercise through a combination of financing and advisory support, including by appointing Mizuho Bank to prepare for credit rating readiness and the subsequent rating exercise. This engagement was supported by the Public-Private Infrastructure Advisory Facility and the Global Infrastructure Facility.
This activity is part of the World Bank’s long-term engagement with the Government of Vietnam to find new ways to channel private investment into the electricity sector. The World Bank estimates that the sector will need to mobilize about $10 billion of investment annually through 2030, of which, EVN itself would need to mobilise estimated $5 billion annually.
Stefanie Stallmeister, acting country director for the World Bank in Vietnam, said: “This successful credit rating for EVNHANOI is a continuation of the World Bank’s support to the energy sector to develop a sustainable financing strategy.
“The credit rating demonstrates the strong operational and commercial performance of Vietnam’s power companies and is expected to attract much-needed commercial capital to the sector.”