BSR secures a strong international credit rating

October 06, 2023 | 17:52
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Fitch Ratings has assigned Binh Son Refining and Petrochemical JSC (BSR) an Issuer Default Rating (IDR) of 'BB', accompanied by a positive outlook. This is testament to the strategic, operational, and financial strength of the company. Bui Ngoc Duong, general director of BSR, spoke to VIR's Thanh Van about this achievement.
BSR secures a strong international credit rating

How did this new rating come about and what does it mean for BSR?

The IDR assessment was carried out by international credit rating agency Fitch Ratings from January to September this year. The credit rating assessment process at BSR was carried out independently and objectively according to the assessment process and criteria of Fitch Ratings, which have been widely published.

In addition to the expansion and upgrade at Dung Quat Refinery, BSR has been assigned by PetroVietnam to carry out research on oil refining projects. We have hired American consulting firm BCG to formulate a long-term development strategy for the company. The government has also requested BSR to coordinate with authorities at all levels to turn Dung Quat Refinery into the nucleus of the National Refinery and Petrochemical Centre in Quang Ngai.

In this context, it is crucial to draw in investment from local and foreign organisations to facilitate BSR’s development strategy. This was the motivation for us to secure an international credit rating, as this result should give confidence to any domestic and international financiers considering investment.

Would you mind giving us an update on the progress of the expanded Dung Quat Refinery project?

After the government approved the adjustment of the investment policy, we made adjustments to the project proposal, but the project is presently on schedule. According to the roadmap, the project is slated to begin construction by the end of the first quarter of 2025 and be in commercial operation by 2028. The main purpose of the project is to improve the efficiency of the refinery, increase the processing capacity, and mix different types of crude oil.

Energy projects have recently received a lot of attention and support from the government. However, we face a considerable obstacle as the government no longer offers capital guarantees. This is a major challenge amidst the current high international interest rates. Therefore, this BB rating will help BSR to access to domestic and foreign capital sources more easily, with optimal interest rates and loan terms.

Is BSR considering a move to the Ho Chi Minh Stock Exchange (HSX) to entice more investment?

BSR is formulating a plan to increase our charter capital, pending submission to and approval from the relevant authorities. The plan aims to increase the company’s ability to secure equity for the Dung Quat Refinery project, as well as other projects in the future.

BSR is strategically transitioning its listing from the Unlisted Public Company Market to the HSX, a move aimed at attracting domestic and foreign shareholders for our long-term development strategy. Fitch Ratings' assessment is a testament to BSR's strong financial health and transparent operations.

As regulatory agencies are stepping up transparency and risk management, BSR will need time to resolve any issues, but as our recent IDR assessment shows, the company shows little financial risk to shareholders.

We plan to have a meeting with shareholders to share more in-depth information about the business this October.

BSR to languish while waiting for capital for Dung Quat Refinery BSR to languish while waiting for capital for Dung Quat Refinery

Despite having gone two-thirds of the way since the investor issued the Front-End Engineering Design (FEED) dossier, the arrangement of investment capital for Dung Quat Oil Refinery remains uncertain.

Dung Quat Oil Refinery to increase capacity Dung Quat Oil Refinery to increase capacity

Deputy Prime Minister Tran Hong Ha signed Decision No.482/QD-TTg on May 5 approving the investment planning to upgrade Dung Quat Oil Refinery located in the central province of Quang Ngai to increase output.

BSR's initial rating results in positive BB BSR's initial rating results in positive BB

Binh Son Refining and Petrochemical JSC (BSR) has just been assigned a rating of BB – the outlook is positive – and a standalone credit profile of BB-.

By Thanh Van

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional