Vietnam's five-year bonds on Thursday rose for the first time in 10 days on speculation banks will buy more debt as an economic slowdown saps demand for loans. The dong gained.
Banks face difficulties in lending as slowing growth affects companies, the central bank said July 7. Credit growth slowed to 0.76 percent in the first half, it said, compared with the government's full-year target of 14 percent to 15 percent. Loans grew slower because of banks' concern that bad loans are rising, ACB Securities said in a research note on Thursday.
"The corporate financial situation isn't very good and banks are reluctant to give more loans," said Hoang Thanh Tam, head of the fixed-income department at Vietnam Maritime Commercial Joint-Stock Bank in Hanoi. "There will be much interest in bonds because money supply is still very high."
The yield on five-year bonds fell two basis points, or 0.02 percentage point, to 10.10 percent, according to a daily fixing rate from banks compiled by Bloomberg. That's the first decline since July 5.
The State Treasury will offer VND1 trillion ($48 million) of two-year bonds and VND2 trillion of five-year debt at an auction on Thursday according to a statement on the Hanoi Stock Exchange's website.
The dong traded at 20,843 per dollar as of 4:39 p.m. Thursday in Hanoi, compared with 20,850 on Wednesday, 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.