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Vietnam’s Five-Year Yield Falls to Two-Month Low on Bank Buying

Vietnam’s benchmark five-year bonds rose, sending the yield to a two-month low, on speculation banks bought the notes amid a slowdown in credit growth. The dong was steady.

The value of outstanding loans in Vietnam may grow 5 percent this year, Central Bank Governor Nguyen Van Binh said in a televised address to the National Assembly in Hanoi yesterday, lagging behind a 14.4 percent increase in 2011, according to government data. Banks have bought 183 trillion dong ($8.87 billion) of government bonds this year, “a lot more” than in previous years, Binh said.

The yield on the benchmark notes fell eight basis points, or 0.08 percentage point, to 9.90 percent, according to a daily fixing rate from banks compiled by Bloomberg. That’s the biggest one-day drop since July 20 and the lowest level since Sept. 14.

“Credit growth is still low, and that’s giving support to the downward trend in yields,” said Tran Kieu Hung, a Hanoi-based bond trader at Bank for Investment & Development of Vietnam. “Most banks have a lot of money and don’t want to lend it, so they buy bonds. Yields are still good.”

The dong traded at 20,848 per dollar as of 2:00 p.m. in Hanoi, unchanged from 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.

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