Vietnam bonds drop most in a year after auction

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Vietnam's five-year bonds on Friday fell the most in more than a year after yields climbed at a debt auction a day earlier. The dong advanced.

The State Treasury sold VND500 billion ($24 million) of five-year notes at 9.9 percent, according to the Hanoi Stock Exchange, compared with the 9.6 percent yield on similar-maturity bonds at the last sale on July 5. The government may have to sell more debt to raise funds, Le Dang Doanh, a former senior economist at the Ministry of Planning and Development, said last week after official data showed state budget revenue dropped 1.7 percent in the first half from a year earlier.

Bond yields "are expected to rise slightly in coming months due to high pressure from government bond issuance," Pham The Anh and Tran Thi Thanh Thao, Hanoi-based analysts at MB Securities Joint-Stock Co., wrote in a research note Thursday.

The yield on the five-year securities rose 24 basis points, or 0.24 percentage point, to 10.07 percent, the highest since May 4, according to a daily fixing from banks compiled by Bloomberg. That's the biggest one-day advance since June 9, 2011. The yield increased 33 basis points this week.

The dong strengthened 0.1 percent on Friday and this week to 20,860 per dollar as of 2:36 p.m. in Hanoi, according to data compiled by Bloomberg. The central bank fixed the reference rate at 20,828, a level unchanged since Dec. 26, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.

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