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Vietnam Five-Year Bonds Rise for a Fourth Week on Banks’ Demand

Vietnam’s benchmark five-year bonds rose for a fourth week on speculation an increase in cash at banks spurred demand for debt. The dong weakened.

The overnight interbank deposit rate fell 109 basis points this week, the most since the five-day period ended Sept. 21, signaling an improvement in funding availability, according to daily fixings from banks compiled by Bloomberg. Rising funds amid weaker demand for credit prompted banks to buy bonds in recent weeks, said Nguyen Tan Thang, fixed-income investment director at Ho Chi Minh City Securities Joint-Stock Co.

“It’s all about liquidity,” said Thang. Cash at banks may start to decline toward year-end as seasonal demand for credit increases, he said.

The yield on benchmark five-year bonds fell seven basis points, or 0.07 percentage point, this week to 9.97 percent, according to a daily fixing rate from banks compiled by Bloomberg. The yield was unchanged today.

Banks bought 186 trillion dong ($8.9 billion) of government bonds this year, “a lot more” than in previous years, Central Bank Governor Nguyen Van Binh said Nov. 13. Bank loans grew 5 percent so far in 2012, said Binh. Credit rose 14.4 percent in the whole of 2011, according to the government.

The dong slipped 0.1 percent this week to 20,858 per dollar as of 3:04 p.m. in Hanoi, according to data compiled by Bloomberg. The currency was little changed from a week earlier.

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: James Regan at jregan19@bloomberg.net

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