Vietnam’s bonds rose for an 11th day, pushing benchmark five-year yields to an 18-month low, on speculation banks will buy debt to improve returns following a drop in money-market rates. The dong advanced.
“Demand is high since government bonds are seen as good investment now,” said Vu Anh Duc, Hanoi-based senior fixed- income dealer at Vietnam Joint-Stock Commercial Bank for Industry and Trade. (CTG) “It’s more profitable to hold bonds than to lend in the interbank market now.”
The overnight interbank deposit rate was at 4.66 percent today, after dropping 2.41 percentage points in April in the third monthly decline, according to data from banks compiled by Bloomberg. The rate was 11.8 percent at the end of 2011.
The yield on five-year notes fell seven basis points, or 0.07 percentage point, to 10.58 percent, the lowest level since November 2010, according to a daily fixing from banks compiled by Bloomberg. Three-year yields dropped four basis points to 10.54 percent.
The dong advanced 0.1 percent to 20,865 per dollar as of 2:45 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank set the reference rate at 20,828, unchanged since Dec. 26, its website showed. The currency is allowed to trade as much as 1 percent on either side of the fixing.
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