Vietnam Bonds Fall for First Time This Month on Excess Supply

Vietnam’s benchmark five-year bonds declined for the first time this month on speculation an increase in the supply of new debt will damp demand in the secondary market. The dong was steady.

The Southeast Asian nation sold 79 trillion dong ($3.8 billion) of government notes in the six months through June, three and half times the amount it raised in the same period of 2011, according to the State Securities Commission. There are another 40 trillion dong of planned sales for the rest of this year, Bank for Investment & Development of Vietnam analysts including Hanoi-based Hoang Nu Ngoc Thuy and Nguyen Thu Linh, wrote in a research note today.

“The secondary bond market will be quiet” as the supply of new debt “will still be very large,” they wrote.

The benchmark five-year yield gained one basis point, or 0.01 percentage point, to 9.62 percent, according to a daily fixing from banks compiled by Bloomberg. That was the first advance since July 27.

The State Treasury will auction 2 trillion dong each of two-, three- and five-year bonds on Aug. 21, according to a statement on the Hanoi Stock Exchange’s website. Vietnam’s Bank for Social Policies will offer 2.5 trillion dong of debt on Aug. 17, according to a separate statement on the exchange’s website.

The dong traded at 20,850 per dollar as of 2:40 p.m. in Hanoi, the same as yesterday, according to data compiled by Bloomberg. The central bank 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 fixing.

To contact Bloomberg News staff for this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

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

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