Bloomberg News

Vietnam One-Year Bonds Fall as Banks Boost Lending; Dong Gains

June 26, 2012

Vietnam’s one-year bonds fell for a fifth day, pushing their yield to the highest level in almost seven weeks, on speculation banks were selling the securities to free up funds for loans. The dong strengthened.

Vietnam will accelerate government spending and boost bank lending to bolster the economy, Deputy Prime Minister Nguyen Xuan Phuc told the National Assembly June 15, after gross domestic product expanded 4 percent in the first quarter, the slowest pace since 2009. The overnight interbank deposit rate jumped 42 basis points today to 6.4 percent, the highest since April 16, according to data compiled by Bloomberg.

“Banks have been given the green light to speed up credit growth,” said Nguyen Tan Thang, head of fixed-income research at Ho Chi Minh City Securities Corp. (HCM) “They want to lend out, rather than use money for investing in bonds.”

The yield on the government’s benchmark one-year bonds rose 13 basis points, or 0.13 percentage point, to 9.51 percent, the highest since May 9, according to a daily fixing from banks compiled by Bloomberg. The yield has surged 71 basis points in the past week.

The dong strengthened 0.2 percent to 20,880 per dollar as of 5:22 p.m. in Hanoi, according to data compiled by Bloomberg. The State Bank of Vietnam set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.

To contact the reporter on this story: Nick Heath in Hanoi at

To contact the editor responsible for this story: James Regan at

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