Vietnam Bonds Fall as Investors Opt for T-Bills; Dong Weakens

Vietnam’s five-year bonds fell for a second day after the central bank sold treasury bills at higher interest rates. The dong weakened.

The State Bank of Vietnam resumed bill auctions March 15 after Governor Nguyen Van Binh said March 6 the bank would issue short-term securities at different terms to withdraw idle cash from the banking system. The central bank sold 2.8 trillion dong ($134 million) of 28-, 91- and 182-day bills today at yields of 11.5 percent to 12.5 percent, according to data compiled by Bloomberg.

“For banks that have to have portfolios for T-bills or for bonds, if the T-bill interest rate is higher of course they choose T-bills,” said Ngo Minh Hoa, an institutional client manager at BaoViet Securities Co. in Hanoi. Concern that fuel- price increases will spur inflation also contributed to the decline in bonds, she said.

The yield on benchmark five-year notes rose two basis points, or 0.02 percentage point, to 11.49 percent, according to a daily fixing from banks compiled by Bloomberg. Ten-year bonds yielded 11.46 percent.

Vietnam raised prices of petroleum products, including gasoline, by as much as 12 percent on March 7. Consumer prices rose 14.2 percent this month, the smallest gain in a year.

The dong fell 0.9 percent to 20,840 per dollar as of 3:55 p.m. in Hanoi, according to data compiled by Bloomberg. The currency has gained 1 percent this quarter. 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 fluctuate by as much as 1 percent on either side of that rate.

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

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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