Vietnam Reaches Investment Grade—But Only for Secured Sovereign Debt

Fitch’s BBB- upgrade signals lower risk for global investors, without changing Vietnam’s sovereign rating

Vietnam has quietly crossed an important threshold in global capital markets. On January 22, Fitch Ratings upgraded Vietnam’s senior secured long-term debt instruments to BBB-, officially placing them in investment-grade territory. While the country’s sovereign credit rating remains at BB+, the move sends a strong signal to international investors navigating risk across emerging markets.

The upgrade applies specifically to secured sovereign instruments, not Vietnam’s general foreign-currency debt. Under Fitch’s new National Credit Rating Criteria issued in September 2025, these instruments are now rated one notch higher than Vietnam’s unsecured long-term foreign-currency obligations. In a global environment where capital is increasingly selective, this distinction matters—particularly for institutional investors bound by investment-grade mandates.

At the center of the decision are Vietnam’s legacy Brady Bonds, a 30-year issuance dating back to 1998, whose principal is partially or fully secured by U.S. Treasury zero-coupon bonds. Fitch’s assessment reflects stronger recovery prospects on these secured instruments, which benefit from explicit collateral protections that materially reduce downside risk. In effect, Vietnam’s secured debt now carries a risk profile closer to lower-tier developed-market instruments than to typical frontier sovereign issuers.

Importantly, Fitch was clear that the upgrade does not alter Vietnam’s overall sovereign credit profile, which it reaffirmed at BB+ with a Stable Outlook in June 2025. However, market participants often view such instrument-level upgrades as a precursor—not a guarantee, but a signal—of improving institutional credibility and debt management sophistication.

Vietnam’s Ministry of Finance has framed the upgrade as the result of closer, more proactive engagement with rating agencies, including Moody’s and S&P Global Ratings. Rather than responding passively to data requests, the ministry is now coordinating across government agencies to articulate Vietnam’s macroeconomic stability, institutional reforms, and long-term growth trajectory—an approach more typical of investment-grade sovereigns.

Beyond sovereign debt, the implications ripple into Vietnam’s domestic capital markets. More than 140 Vietnamese companies across sectors have now obtained credit ratings for bond issuance, and in 2024, rated bonds accounted for 46.3% of total issuance value. This growing reliance on ratings reflects a structural shift toward transparency and risk pricing—key prerequisites for attracting long-term foreign capital.

The broader takeaway for global investors is nuanced but clear: Vietnam is not yet investment grade as a sovereign, but parts of its debt stack already are. As global funds rebalance exposure across Southeast Asia, that distinction could prove decisive—raising a strategic question for markets: if secured Vietnamese debt is now investment grade, how long before the sovereign itself follows?