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Vietnam’s Bond Yields Drop to One-Month Low as Cash Spurs Demand

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Oct. 31 (Bloomberg) -- Vietnam’s bonds gained for a fifth day, pushing the five-year yield to the lowest level in more than a month, on speculation banks have more cash to investment in debt. The dong was steady.

Fund supply in the banking system has “improved” after lenders bought 60 metric tons of gold from the public since May and converted those into cash, the central bank’s Governor Nguyen Van Binh told lawmakers at National Assembly’s meeting in Hanoi today.

The yield on the benchmark five-year notes fell two basis points, or 0.02 percentage point, to 10.13 percent in Hanoi, the lowest level since Sept. 26, according to a daily fixing from banks compiled by Bloomberg.

Yields that are higher than a 9 percent deposit-rate limit at banks and increasing cash at lenders will spur demand for government debt, Nguyen Thanh Khiem, a Hanoi-based bond analyst at BaoViet Securities Co., wrote in a research note.

The dong traded at 20,848 per dollar as of 4:30 p.m. in Hanoi, unchanged from 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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