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Vietnam’s Bonds Gain as Banks Invest Surplus Cash; Dong Steady

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May 17 (Bloomberg) -- Vietnam’s two-year bonds rose on speculation banks have surplus cash to invest. The dong was little changed.

Lenders’ outstanding commercial loans dropped 1.71 percent as of April 16 from the end of 2011, online news service Cafe F reported last week, citing the National Financial Supervisory Commission. Vietnam’s monetary authority said in February that it was limiting business lending.

“Banks have abundant cash as they haven’t lent out too much so far this year because of the central bank’s limited credit-growth policy,” said Do Thi Phuong Trang, a Hanoi-based analyst at Bank for Investment and Development of Vietnam. “That has left them with more money to buy government bonds.”

The yield on two-year bonds fell three basis points, or 0.03 percentage point, to 8.86 percent, according to a daily fixing from banks compiled by Bloomberg.

The dong traded at 20,848 per dollar as of 3:50 p.m. in Hanoi after closing yesterday at 20,853, according to data compiled by Bloomberg. The central bank set the currency’s reference rate at 20,828, unchanged since Dec. 26, its website showed. The currency is allowed to trade as much as 1 percent on either side of the official fixing.

To contact Bloomberg News staff for this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net

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

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