Bloomberg News

Vietnam’s Bonds Gain for Third Week on Interest-Rate Outlook

September 30, 2011

Sept. 30 (Bloomberg) -- Vietnam’s five-year bonds gained for a third week, pushing yields to five-month lows, on speculation lending rates will come down after inflation slowed for the first time in more than a year.

Consumer prices climbed 22.42 percent in September from a year earlier, easing from a 23.02 percent pace in August, according to figures released by the General Statistics Office on Sept. 24. Vietnam’s government said last month that the central bank will leave its benchmark interest rates unchanged and consider cutting them if inflation slows.

“Yields are declining because investors are expecting that lending rates will go down,” said Vu Anh Duc, a Hanoi-based senior fixed-income dealer at Vietnam Bank for Industry and Trade, also known as Vietinbank.

The yield on the benchmark five-year notes fell six basis points, or 0.06 percentage point, to 12.40 percent this week, according to a daily fixing from banks compiled by Bloomberg. That was the lowest level since April 22. The rate has dropped six basis points this month and this quarter.

The dong rose 0.4 percent to 20,832 per dollar as of 4:57 p.m. in Hanoi, according to data compiled by Bloomberg. The currency fell 0.1 percent this week, 0.2 percent this month and 1.2 percent this quarter. The central bank fixed the reference rate at 20,628 today, according to its website. The dong is allowed to trade up to 1 percent on either side of the rate.

--Nguyen Kieu Giang. Editors: Andrew Janes, Simon Harvey

To contact Bloomberg News staff for this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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