Bloomberg News

Vietnam One-Year Bond Yield at Three-Month Low as Banks Purchase

November 27, 2012

Vietnam’s one-year bonds climbed, pushing the yield to a three-month low, on speculation banks stepped up debt purchases as slower lending left them with spare cash. The dong was steady.

Outstanding loans rose 3.48 percent in the first 10 months, compared with a 2012 target for an 8 percent to 10 percent expansion, central bank Governor Nguyen Van Binh said in an interview with Vietnam Investment Review yesterday. Lenders have bought bonds as their cash increased, said Pham Phuong Lan, the Hanoi-based head of fixed-income and currency trading at Bank for Investment & Development of Vietnam.

“Liquidity at banks is still very good,” she said by telephone today, citing a decrease in the interbank overnight deposit rate. The rate, a gauge of funding availability, fell 26 basis points this month to 1.88 percent, according to daily fixings by banks compiled by Bloomberg.

The yield on one-year notes fell eight basis points, or 0.08 percentage point, to 8.82 percent, according to a daily fixing rate from banks compiled by Bloomberg. That’s the biggest decline since Oct. 31 and the lowest level since Aug. 23. The yield on five-year bonds was steady at 9.88 percent.

Vietnam banks bought 89 percent of the 132.3 trillion dong ($6.3 billion) of securities issued by the government this year as of Nov. 21, Dau Tu Chung Khoan magazine reported Nov. 23, citing the Hanoi Stock Exchange.

The dong traded at 20,858 per dollar as of 4:10 p.m. in Hanoi, unchanged from yesterday, 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 as much as 1 percent on either side of the rate.

To contact the reporter on this story: Nick Heath in Hanoi at nheath2@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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