The yield on Vietnam’s one-year bonds fell to the lowest level in almost four years after the government sold debt of that maturity at almost 50 basis points less than the last sale. The dong was little changed.
The yield dropped by the most since May after the State Treasury sold 926 billion dong ($44 million) of 364-day bills at an average yield of 8 percent yesterday, compared with 8.49 percent on Dec. 24, according to a posting on the Hanoi Stock Exchange website. Yields have fallen as an economic slowdown crimped credit demand, boosting cash levels at banks and spurring lenders’ demand for debt, said Nguyen Duy Phong, a Ho Chi Minh City-based analyst at Viet Capital Securities Co.
“Credit growth could improve compared to 2012 but not significantly,” he said. “Investors feel there is still room for fixed-income product values to increase further.”
The yield on the one-year bonds fell 23 basis points, or 0.23 percentage point, to 8.28 percent, according to a daily fixing rate from banks compiled by Bloomberg. That’s the lowest level since Feb. 20, 2009 and the sharpest decline since May 15. The yield on benchmark five-year securities fell five basis points to 9.68 percent, the lowest since Aug. 21.
The value of outstanding loans increased by around 7 percent in 2012, according to a Dec. 27 statement from the central bank, which is targeting 12 percent credit expansion this year. Lending growth may be slow in the first few months of 2013, Prime Minister Nguyen Tan Dung said in his New Year’s message posted on the government’s website Jan. 1.
The interbank overnight deposit rate dropped 13 basis points to 3.45 percent, the fourth day of declines, according to daily fixings by banks compiled by Bloomberg. The rate has fallen 105 basis points since Jan. 2, signaling banks’ funding availability has increased.
The dong traded at 20,840 per dollar as of 3:03 p.m. in Hanoi, compared with 20,835 yesterday, according to data compiled by Bloomberg. The State Bank of Vietnam set its reference rate at 20,828, unchanged since December 2011, according to its website. The currency is allowed to trade as much as 1 percent on either side of the daily fixing.