FiinRatings reaffirms BCG’s 'BB' rating; revises outlook to Stable

Hanoi, 28 June 2022

FiinRatings has reaffirmed Bamboo Capital Joint Stock Company’s (“BCG”) long-term issuer rating of ‘BB’ and revised the rating outlook to ‘Stable’ from Positive. The rating outlook revision is primarily based on the reflection of changes in the operating environment of BCG and also its expansion plan into new business lines such as insurance and pharmaceutical industries which we believe will keep the Financial Risk Profile in the medium term at Significant level and the Business risk profile remains unchanged at Fair category. In our view, a positive rating action is remote and only be warranted if the company could accelerate the deleveraging process and better-than-expected core ratios such as Debt/EBITDA of less than 5.x in the near term.

Rating Sensitivity Factors:

We could take positive rating actions if the Company is able to:

• The company's business risk profile improves while maintaining its current financial risk profile. Improvements to its business risk profile may include: i) the company developing a track record in project finance repayments after they enter operation, leading to steady and consistent accruals to capital thereby lowering the leverage and improving financial flexibility; ii) no significant delay in selling activities for its real estate projects or if its cash flow generated from these projects come earlier than expected;
• As the real estate and renewable energy projects continue to generate cash flows, the company gradually uses these proceeds to pay back its project loans, reducing or maintaining its leverage of Debt/EBITDA to less than 5.0x in upcoming periods.

We could take negative rating actions in cases:

• The company's business risk profile deteriorates. This scenario could occur if i) the Company aggressively expands its investment activities in non-core competency segments or capitalintensive industries which materially erode its financial flexibility, or ii) the company’s future energy projects have exposure to uncertainty related to the regulatory framework, or iii) substandard operation of completed projects, seriously affecting project payback and cash flow generation;
• The company’s leverage position deteriorates materially with Debt to EBITDA increasing beyond 10.0x in the coming periods.

Details of the rating announcement are HERE

FiinRatings, a brand and part of FiinGroup, is licensed by the Ministry of Finance to operate as a Credit Rating Agency (“CRA”) for Vietnam on 20 March 2020. With continuous effort to improve expertise and credit rating methodologies, on 24 May 2021, FiinRatings received Technical Assistance from S&P Global Ratings and ADB. On March 10th, 2022, FiinGroup has been officially approved by the Climate Bonds Initiative (CBI) as the first authorized company in Vietnam to verify green bonds issued by Vietnamese businesses when participating in CBI's program.

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