Yields on Vietnam's one-year bonds rose to the highest level in more than six weeks on Friday due to increased supply and high volume selling by foreigners, traders said.
The yield on one-year government bond was up 0.23 point to 6.23 percent on Friday, the highest since May 21, according to Reuters fixings data.
Foreign investors sold a net 5.7 trillion dong ($268 million) of bonds in June and continued selling into July, according to Vietcombank Securities.
Increased bonds supply from the State Treasury and banks recently has lowered prices. The State Treasury will hold another auction on July 11 to raise a combined 5 trillion dong.
Vietnam had the fastest-growing government bond market in emerging East Asia in the first quarter ended March, with debt value jumping 64.6 percent from a year ago to $29 billion, the Asian Development Bank (ADB) said in a report in June.
The government said last year it was prepared to sell a maximum 60 trillion dong worth of bonds in 2013 to generate revenue for public spending.
Banks have spent less money on government bonds in recent months and invested large sums in buying gold to comply with a central bank order to return gold deposits to customers ahead of the June 30 deadline.
While Vietnamese bonds are less attractive in the short-term, debt remains a good bet in the mid and long term, according to bankers.
Fixings of Vietnamese bond yields are calculated daily by Reuters, using bid and ask yield rates contributed by both foreign and domestic banks prior to 0400 GMT.