Bloomberg News

Vietnam’s Bond Yields Drop to One-Week Low on Inflation Outlook

December 29, 2011

Dec. 29 (Bloomberg) -- Vietnam’s five-year bonds rose, pushing yields to a one-week low, on speculation demand for the securities will increase as inflation slows. The dong slid.

The pace of increases in consumer prices decelerated for a fourth month in December to 18.1 percent from 19.8 percent in November, official data showed on Dec. 23. The country can reduce the inflation rate to below 10 percent in 2012 as long as money-supply growth doesn’t exceed 16 percent, Do Thuc, general director of the General Statistics Office, said at a briefing in Hanoi today.

“Investors are buying bonds because they anticipate yields will fall next year,” said Nguyen Thanh Danh, a Ho Chi Minh City-based money-market dealer at Saigon Thuong Tin Commercial Joint-Stock Bank. “Rates are expected to decline with the inflation rate.”

The yield on five-year government notes fell one basis point, or 0.01 percentage point, to 12.55 percent, the lowest level since Dec. 22, according to a daily fixing from banks compiled by Bloomberg.

The State Treasury sold 900 billion dong ($42.8 million) of three-year bonds yesterday, compared with 700 billion dong issued last week, according to the Hanoi Stock Exchange.

The dong weakened 0.2 percent to 21,038 per dollar as of 2:40 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank fixed the reference rate at 20,828 today, unchanged for a third day, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.

--Diep Ngoc Pham, with assistance from Nguyen Dieu Tu Uyen in Hanoi. Editors: Anil Varma, Ven Ram

To contact Bloomberg News staff for this story: Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net

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


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