Vietnam bonds fall as yields rise at debt auctions; dong stable

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Vietnam's five-year bonds fell on Friday, snapping a three-day gain, after the government increased yields at a bond auction. The dong was stable.

The State Treasury sold VND200.2 billion ($9.5 million) of five-year notes at 9.6 percent on Thursday, according to the Hanoi Stock Exchange's website, up from 9.55 percent at a sale of similar-maturity debt on June 21.

"Increases in auction rates prompted some investors to demand higher yields in the secondary market," Do Hoang Quynh Trang, a fixed-income trader at Hanoi-based Ocean Commercial Joint-Stock Bank. A prospective increase in bank lending continues to weaken appetite for government debt, according to a research note published today by Ho Chi Minh City-based ACB Securities.

The benchmark five-year yield climbed one basis point, or 0.01 percentage point, to 9.74 percent in Hanoi, according to a daily fixing from banks compiled by Bloomberg.

The dong traded at 20,880 per dollar as of 4 p.m. Friday in Hanoi, compared with 20,885 on Thursday and 20,878 at the end of last week, according to data compiled by Bloomberg. The central bank set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade as much as 1 percent on either side of the fixing.

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