Vietnam Three-Year Bond Yield Drops to 2009 Low Before Auction

Vietnam’s three-year bonds rose, pushing the yield to the lowest level since May 2009, on speculation strong demand from banks at an auction tomorrow will drive rates lower. The dong was steady.

The State Treasury will offer 5 trillion dong ($240 million) of two-, three- and five-year securities, according to a statement from the Hanoi Stock Exchange. Rates for one-, two-and three-year notes fell at auctions on Jan. 7 and Dec. 27. Low credit demand has spurred banks to buy more debt with surplus cash, said Nguyen Tan Thang, fixed-income investment director at Ho Chi Minh City Securities Joint-Stock Co.

“Most good banks have a lot of money but cannot lend out so mostly they’re buying bonds,” he said.

The yield on the three-year bonds fell 10 basis points, or 0.10 percentage point, to 8.90 percent, according to a daily fixing rate from banks compiled by Bloomberg. That’s the lowest level since May 25, 2009 and the biggest decline since Nov. 27. The yield on the benchmark five-year notes fell five basis points to 9.62 percent.

The dong traded at 20,843 per dollar as of 3:52 p.m. in Hanoi, the same as 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 rate.

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