Bloomberg News

Vietnam’s One-Year Bonds Fall on Debt Supply, Higher Money Rates

August 27, 2012

Vietnam’s one-year bonds fell for a sixth day, pushing the yield to a one-month high, on speculation demand for existing securities will weaken as the government sells new debt. The dong was little changed.

The State Treasury will offer 5 trillion dong ($240 million) of notes on Aug. 29 and Bank for Social Policies will offer 2.5 trillion dong of debt on Aug. 31, according to the Hanoi Stock Exchange. Vietnam’s overnight money-market rate more than quadrupled this month as banks hoarded cash to meet customer withdrawals after Nguyen Duc Kien, co-founder of Asia Commercial Bank, was arrested on Aug. 20. The rate was at 6.03 percent today, compared with 1.47 percent at the end of July.

“Supply of government bonds continues to be abundant,” analysts at Bank for Investment & Development of Vietnam, including Hanoi-based Hoang Nu Ngoc Thuy and Nguyen Thu Linh, wrote in a research note today. “Borrowing costs, which will probably stay high, and unstable market sentiment” will deter investors, they wrote.

The yield on the one-year notes gained two basis points, or 0.02 percentage point, to 8.90 percent, the highest level since July 27, according to a daily fixing from banks compiled by Bloomberg.

The dong gained 0.1 percent to 20,865 per dollar as of 4:03 p.m. in Hanoi, according to data compiled by Bloomberg. The State Bank of Vietnam set the currency’s reference rate at 20,828, unchanged since Dec. 26, according to its website. The dong is allowed to trade as much as 1 percent on either side of the rate.

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: James Regan at jregan19@bloomberg.net


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