Bloomberg News

Vietnam Bonds Fall as Government Auctions Debt; Dong Weakens

January 12, 2012

Jan. 12 (Bloomberg) -- Vietnamese bonds fell as the government sold 1.88 trillion dong ($89 million) of debt after the State Bank of Vietnam signaled it may reduce borrowing costs later in the year. The dong weakened.

The central bank will adjust policy rates to more suitable levels, to help ease the average level of market interest rates, Governor Nguyen Van Binh said yesterday. The State Treasury sold 1 trillion dong of three-year bonds and 880 billion dong of five-year bonds today, according to a statement posted on the Hanoi Stock Exchange’s website.

“Banks bought bonds at the auction this time after the governor indicated that interest rates may come down after the first quarter,” said Do Hoang Quynh Trang, a fixed-income trader at Hanoi-based Ocean Commercial Joint-Stock Bank.

The yield on the five-year note gained two basis points, or 0.02 percentage point, to 12.46 percent, according to daily fixing prices from banks compiled by Bloomberg.

The dong fell 0.1 percent to 21,035 per dollar as of 5:35 p.m. local time, according to data from banks compiled by Bloomberg. The central bank set the reference rate at 20,828 per dollar, unchanged since Dec. 26, according to its website. The currency is allowed to fluctuate by as much as 1 percent on either side of that rate.

--Diep Ngoc Pham. Editors: Andrew Janes, Anil Varma

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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