Vietnam's five-year bond yield fell to the lowest level since 2007 on speculation low funding costs are spurring demand for government securities. The dong dropped.
The overnight interbank deposit fixing fell one basis point, or 0.01 percentage point, to 0.99 percent, the lowest in Bloomberg data going back to June 2009, according to data compiled by Bloomberg. While deposits rose 5.2 percent in the first four months of 2013, credit grew 2.1 percent, according to a May 15 posting on the government website, citing the central bank.
"Funding costs in the whole system are quite low," said Pham Tri Hieu, a fixed-income trader at Military Commercial Joint-Stock Bank in Hanoi. "Surplus funds are putting pressure on banks to make investments, which supports demand for bonds."
The five-year yield declined five basis points to 8.45 percent, the lowest level since November 2007, according to a daily fixing from banks compiled by Bloomberg.
The dong slid 0.1 percent to 20,995 per dollar as of 4:35 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank 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 fixing.