Vietnam's government bonds fell for a second week, with the five-year yield near a six-month high, after Moody's Investors Service lowered the country's sovereign credit rating.
The yield on benchmark five-year notes climbed to 11.50 percent today, compared with 11.44 at the end of last week, according to a daily fixing price from banks compiled by Bloomberg. The rate reached 11.59 percent on Thursday, the highest since June 7.
Vietnam's long-term foreign-currency rating was cut to B1 from Ba3, with a negative outlook as inflation accelerates, foreign reserves decline and the dong stays weak. The new rating, four steps below investment grade, leaves Vietnam on par with Sri Lanka and Mongolia, according to data compiled by Bloomberg.
"The issues which Moody's cited for its downgrade are what people in the market were aware of. It has shadowed the market a bit," said Do Ngoc Quynh, a deputy director of treasury department at the Hanoi-based Bank for Investment & Development of Vietnam. He is also the secretary-general of the Vietnam Bond Market Association.
The dong traded at 19,498 per dollar as of 3:45 p.m. local time in Hanoi Friday, unchanged from Thursday, and compared to 19,490 at the end of last week, according to prices from banks, compiled by Bloomberg. The central bank fixed the reference rate at 18,932 Friday, a level unchanged since Aug. 18, its website showed. The currency is allowed to trade up to 3 percent on either side of a set daily rate.
The dong traded at between 21,140 and 21,210 at money changers in Ho Chi Minh City Friday, compared with 21,130 and 21,190 yesterday, according to a telephone information service run by state-owned Vietnam Posts & Telecommunications.