Vietnam’s Five-Year Bonds Fall Most in 11 Months as Demand Slows

Vietnam’s five-year bonds fell the most in more than 11 months on speculation demand slowed after yields fell to a three-year low. The dong was steady.

Yields on benchmark debt dropped 306 basis points in 2012 to 9.49 percent on May 15, the lowest level since June 2009, after regulatory restrictions on lending prompted banks to invest surplus cash in government debt.

“Banks don’t see that yields will go down much further in the short term, so they’re now in a position to take profit,” said Nguyen Tan Thang, head of fixed-income research at Ho Chi Minh City Securities Corp. (HCM)

Five-year bond yields rose 16 basis points, or 0.16 percentage point, to 9.66 percent, according to a daily fixing rate from banks compiled by Bloomberg. That’s the biggest jump since June 9, 2011.

The dong was at 20,847 per dollar, compared with 20,850 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 up to 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: Sandy Hendry at shendry@bloomberg.net