Vietnam's government bonds fell on Monday, with yields climbing the most since August, on speculation banks don't have enough cash to buy the securities. The dong weakened.
The State Treasury failed to sell any of the VND2 trillion ($96 million) of bonds offered at an auction on Oct. 13, according to the Hanoi Stock Exchange's website.
While the interest-rate ceilings set by the government on the five-year and three-year debt were 12.15 percent and 12.10 percent, respectively, investors demanded a minimum rate of 12.4 percent for both maturities, according to the exchange.
"The unsuccessful auction reflected the lack of liquidity in the banking system," Nguyen Duy Phong, a Ho Chi Minh City-based analyst at ACB Securities Inc., wrote in a research note released on Monday.
The yield on the benchmark five-year government bond gained six basis points, or 0.06 percentage point, to 12.41 percent, the biggest jump since Aug. 22, according to a daily fixing from banks compiled by Bloomberg.
Interbank interest rates have increased to as high as 20 percent for one-month loans after the central bank boosted some policy rates, online newswire VnEconomy reported on Oct. 14. The State Bank of Vietnam raised its refinancing rate to 15 percent from 14 percent with effect from Oct. 10 to cool inflation.
The dong slid 0.3 percent to 20,913 per dollar as of 2:45 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank weakened the reference rate for the seventh time this month, fixing it at 20,708 per dollar today, from 20,688 on Oct. 14, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.