Vietnam 5-Year Bond Yield Drops Most in Eight Months After Sale

Vietnam’s government bonds rose, with the five-year yield dropping by the most in eight months, after the government’s borrowing costs fell at a debt auction. The dong was little changed.

The State Treasury sold 1 trillion dong ($48 million) of five-year notes at 9.30 percent and 1.95 trillion dong of three-year securities at 8.65 percent on Jan. 11, the Hanoi Stock Exchange said in a statement on its website. That compares with 9.65 percent and 9.15 percent, respectively, for similar-maturity debt at a Dec. 27 sale. Credit growth may be low in the early months of 2013, Prime Minister Nguyen Tan Dung wrote in his New Year message posted Jan. 2 on the government website.

“Banks are very keen on holding government bonds as it’s still profitable and a relatively safe channel to invest in these days when economic difficulties are slowing lending,” said Pham Tri Hieu, a fixed-income trader at Military Commercial Joint-Stock Bank in Hanoi.

The yield on the five-year bonds fell 20 basis points, or 0.2 percentage point, to 9.45 percent, according to a daily fixing from banks compiled by Bloomberg. That was the biggest one-day drop since May 10 and the lowest rate since June 11. The three-year yield slid 25 basis points to 8.75 percent, the sharpest decline since May 15.

The dong traded at 20,842 per dollar as of 3:35 p.m. in Hanoi, compared with 20,843 at the end of last week, according to data compiled by Bloomberg. The central bank set its reference rate at 20,828, unchanged since Dec. 26, 2011, according to its website. The currency is allowed to trade as much as 1 percent on either side of the fixing.

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