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S&P revises Vingroup outlook to negative on persistent high leverage

S&P Global Ratings revised its outlook on Vingroup JSC to negative from stable and affirmed the company's long-term issuer credit rating at B+.

The rating agency said Sept. 12 that it expects the Vietnam-based real estate company's leverage to remain high between 4.5x and 5.0x over the next two years, compared with 5.0x in 2018 and 3.2x in 2017. The elevated leverage is attributed to the company's rapid debt-funded expansion into new ventures, including the automobile business, which require large up-front investment and are likely to incur losses in the initial ramp-up phase.

The affirmation indicates that Vingroup will maintain its position as the largest property developer and shopping mall operator in Vietnam. Ratings said it expects the company's total adjusted debt to reach 130 trillion dong by end-2019 and between 150 trillion dong and 155 trillion dong by 2020.

As of Sept. 12, US$1 was equivalent to 23,245 Vietnamese dong.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found in the sources section.