Vietnamese banks hit by Vinashin default

State-owned shipbuilder, Vinashin, defaulted on $60 million of loan repayments in December, triggering a flood of ratings downgrades. The country’s sovereign rating was hit along with the credit ratings of leading Vietnamese banks, despite the State Bank of Vietnam’s efforts to shore up sound risk management practices at financial institutions during the past couple of years. Harry Thompson reports

Standard and Poor’s (S&P) followed rival rating agencies Moody’s Investors Service and Fitch Ratings at the end of last year by downgrading the long-term credit rating for Vietnam, citing concerns about the country’s banking sector. S&P downgraded Vietnam’s long-term foreign currency sovereign credit rating to BB- from BB and its local currency rating to BB from BB+. The same month, Moody’s downgraded the country’s sovereign debt by one notch to B1 from Ba3; while Fitch had already downgraded